Attached files
file | filename |
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EX-32.2 - EX-32.2 - RF MICRO DEVICES INC | g25579exv32w2.htm |
EX-32.1 - EX-32.1 - RF MICRO DEVICES INC | g25579exv32w1.htm |
EX-31.1 - EX-31.1 - RF MICRO DEVICES INC | g25579exv31w1.htm |
EX-31.2 - EX-31.2 - RF MICRO DEVICES INC | g25579exv31w2.htm |
EXCEL - IDEA: XBRL DOCUMENT - RF MICRO DEVICES INC | Financial_Report.xls |
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
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 January 1, 2011
or
o | 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 (State or other jurisdiction of incorporation or organization) |
56-1733461 (I.R.S. Employer Identification No.) |
|
7628 Thorndike Road Greensboro, North Carolina (Address of principal executive offices) |
27409-9421 (Zip Code) |
(336) 664-1233
(Registrants telephone number, including area code)
(Registrants 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 o
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 o
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 o | Non-accelerated filer o | Smaller reporting company o | |||
(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 o No þ
As of February 2, 2011, there were 276,119,728 shares of the registrants common stock outstanding.
RF MICRO DEVICES, INC. AND SUBSIDIARIES
INDEX
2
Table of Contents
PART I FINANCIAL INFORMATION
ITEM 1.
RF MICRO DEVICES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
January 1, | April 3, | |||||||
2011 | 2010 | |||||||
ASSETS |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 158,386 | $ | 104,778 | ||||
Restricted cash and trading security investments (Note 8) |
415 | 17,698 | ||||||
Short-term investments (Note 8) |
145,903 | 134,882 | ||||||
Accounts receivable, less allowance of $811 and $802 as of
January 1, 2011 and April 3, 2010, respectively |
138,753 | 108,219 | ||||||
Inventories (Note 3) |
133,440 | 122,509 | ||||||
Prepaid expenses |
6,203 | 5,415 | ||||||
Other receivables |
26,127 | 34,854 | ||||||
Other current assets (amount recorded at fair value is $0 and $2,302 at
January 1, 2011 and April 3, 2010, respectively) (Note 6 and Note 8) |
18,346 | 20,469 | ||||||
Total current assets |
627,573 | 548,824 | ||||||
Property and equipment, net of accumulated depreciation of $527,858 at
January 1, 2011 and $490,098 at April 3, 2010 |
220,252 | 247,085 | ||||||
Goodwill |
95,628 | 95,628 | ||||||
Intangible assets, net |
88,299 | 102,169 | ||||||
Long-term investments (Note 8) |
2,724 | 2,175 | ||||||
Other non-current assets (Note 6) |
18,876 | 18,127 | ||||||
Total assets |
$ | 1,053,352 | $ | 1,014,008 | ||||
LIABILITIES AND SHAREHOLDERS EQUITY |
||||||||
Current liabilities: |
||||||||
Accounts payable |
$ | 98,073 | $ | 82,448 | ||||
Accrued liabilities |
43,174 | 41,805 | ||||||
Current portion of long term debt (Note 5) |
5,169 | 15,053 | ||||||
No net cost credit line (Note 5) |
| 12,900 | ||||||
Other current liabilities (Note 6) |
227 | 527 | ||||||
Total current liabilities |
146,643 | 152,733 | ||||||
Long-term debt (Note 5) |
207,368 | 289,837 | ||||||
Other long-term liabilities (Note 6) |
40,977 | 41,354 | ||||||
Total liabilities |
394,988 | 483,924 | ||||||
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; 275,821 and 269,106
shares issued and outstanding at January 1, 2011 and April 3, 2010,
respectively |
972,572 | 961,216 | ||||||
Additional paid-in capital |
277,464 | 261,117 | ||||||
Accumulated other comprehensive income, net of tax |
228 | 75 | ||||||
Accumulated deficit |
(591,900 | ) | (692,324 | ) | ||||
Total shareholders equity |
658,364 | 530,084 | ||||||
Total liabilities and shareholders equity |
$ | 1,053,352 | $ | 1,014,008 | ||||
See accompanying Notes to Condensed Consolidated Financial Statements.
3
Table of Contents
RF MICRO DEVICES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)
Three Months Ended | ||||||||
January 1, 2011 | January 2, 2010 | |||||||
Revenue |
$ | 278,794 | $ | 250,271 | ||||
Operating costs and expenses: |
||||||||
Cost of goods sold |
175,705 | 159,081 | ||||||
Research and development |
33,920 | 32,997 | ||||||
Marketing and selling |
14,621 | 13,821 | ||||||
General and administrative |
11,036 | 9,496 | ||||||
Other operating expense (Note 7) |
192 | 1,288 | ||||||
Total operating costs and expenses |
235,474 | 216,683 | ||||||
Income from operations |
43,320 | 33,588 | ||||||
Interest expense |
(3,800 | ) | (5,863 | ) | ||||
Interest income |
124 | 317 | ||||||
Loss on retirement of convertible
subordinated notes (Note 5) |
| (408 | ) | |||||
Other income |
642 | 126 | ||||||
Income before income taxes |
40,286 | 27,760 | ||||||
Income tax expense (Note 6) |
(3,600 | ) | (2,832 | ) | ||||
Net income |
$ | 36,686 | $ | 24,928 | ||||
Net income per share (Note 2): |
||||||||
Basic |
$ | 0.13 | $ | 0.09 | ||||
Diluted |
$ | 0.13 | $ | 0.09 | ||||
Shares used in per share calculation: |
||||||||
Basic |
275,009 | 268,287 | ||||||
Diluted |
284,152 | 285,907 |
See accompanying Notes to Condensed Consolidated Financial Statements.
4
Table of Contents
RF MICRO DEVICES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)
Nine Months Ended | ||||||||
January 1, 2011 | January 2, 2010 | |||||||
Revenue |
$ | 838,430 | $ | 717,568 | ||||
Operating costs and expenses: |
||||||||
Cost of goods sold |
524,280 | 460,827 | ||||||
Research and development |
105,626 | 103,477 | ||||||
Marketing and selling |
44,083 | 42,131 | ||||||
General and administrative |
36,941 | 37,429 | ||||||
Other operating expense (Note 7) |
1,229 | 3,937 | ||||||
Total operating costs and expenses |
712,159 | 647,801 | ||||||
Income from operations |
126,271 | 69,767 | ||||||
Interest expense |
(13,329 | ) | (18,537 | ) | ||||
Interest income |
619 | 1,063 | ||||||
(Loss) gain on retirement of convertible subordinated
notes (Note 5) |
(1,646 | ) | 1,540 | |||||
Other income (expense) |
2,505 | (139 | ) | |||||
Income before income taxes |
114,420 | 53,694 | ||||||
Income tax expense (Note 6) |
(13,996 | ) | (9,403 | ) | ||||
Net income |
$ | 100,424 | $ | 44,291 | ||||
Net income per share (Note 2): |
||||||||
Basic |
$ | 0.37 | $ | 0.17 | ||||
Diluted |
$ | 0.36 | $ | 0.16 | ||||
Shares used in per share calculation: |
||||||||
Basic |
272,316 | 266,995 | ||||||
Diluted |
279,493 | 293,787 |
See accompanying Notes to Condensed Consolidated Financial Statements.
5
Table of Contents
RF MICRO DEVICES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Nine Months Ended | ||||||||
January 1, 2011 | January 2, 2010 | |||||||
Cash flows from operating activities: |
||||||||
Net income |
$ | 100,424 | $ | 44,291 | ||||
Adjustments to reconcile net income to net cash
provided by operating activities: |
||||||||
Depreciation |
47,886 | 55,484 | ||||||
Amortization and other non cash items |
24,440 | 27,361 | ||||||
Excess tax benefit from exercises of stock options |
(78 | ) | | |||||
Deferred income taxes |
1,599 | (530 | ) | |||||
Foreign currency adjustments |
(1,054 | ) | 165 | |||||
Asset impairments (including restructuring impairments) |
27 | 3,093 | ||||||
Loss (gain) on retirement of convertible subordinated notes |
1,646 | (1,540 | ) | |||||
Gain on disposal of assets, net |
(6 | ) | (1,336 | ) | ||||
Income from equity investment |
(574 | ) | | |||||
Share-based compensation expense |
20,000 | 20,584 | ||||||
Changes in operating assets and liabilities: |
||||||||
Accounts receivable, net |
(30,350 | ) | (7,271 | ) | ||||
Inventories |
(10,847 | ) | (7,624 | ) | ||||
Prepaid expense and other current and non-current assets |
8,513 | (13,675 | ) | |||||
Accounts payable and accrued liabilities |
16,416 | 15,222 | ||||||
Income tax payable/recoverable |
(150 | ) | (4,273 | ) | ||||
Other liabilities |
(644 | ) | (1,863 | ) | ||||
Net cash provided by operating activities |
177,248 | 128,088 | ||||||
Investing activities: |
||||||||
Purchase of property and equipment |
(20,935 | ) | (5,873 | ) | ||||
Proceeds from sale of property and equipment |
456 | 2,615 | ||||||
Proceeds from maturities of securities available-for-sale |
207,523 | 319,762 | ||||||
Purchase of securities available-for-sale |
(198,756 | ) | (289,003 | ) | ||||
Net cash (used in) provided by investing activities |
(11,712 | ) | 27,501 | |||||
Financing activities: |
||||||||
Payment of debt |
(110,775 | ) | (207,842 | ) | ||||
(Payments) proceeds from no net cost loan |
(12,900 | ) | 350 | |||||
Excess tax benefit from exercises of stock options |
78 | | ||||||
Proceeds from the issuance of common stock |
13,827 | 719 | ||||||
Tax withholding paid on behalf of employees for restricted stock units |
(2,471 | ) | | |||||
Restricted cash associated with financing activities |
(183 | ) | (439 | ) | ||||
Repayment of capital lease obligations |
(98 | ) | (127 | ) | ||||
Net cash used in financing activities |
(112,522 | ) | (207,339 | ) | ||||
Net increase (decrease) in cash and cash equivalents |
53,014 | (51,750 | ) | |||||
Effect of exchange rate changes on cash |
594 | 262 | ||||||
Cash and cash equivalents at the beginning of the period |
104,778 | 172,989 | ||||||
Cash and cash equivalents at the end of the period |
158,386 | $ | 121,501 | |||||
See accompanying Notes to Condensed Consolidated Financial Statements.
6
Table of Contents
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 Companys audited consolidated financial statements and notes
thereto included in the Companys Annual Report on Form 10-K for the fiscal year ended April 3,
2010.
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 acquired an immaterial investment in a privately-held company
in fiscal 2008 and
accounted for it under the cost method. During the third quarter of fiscal 2011, this
company was recapitalized and restructured, which increased
RFMDs ownership in this company to
approximately 20%. As a result, RFMD adopted and applied the equity method of accounting to
this investment retroactively pursuant to Accounting Standards Codification (ASC) 323,
Investments-Equity Method and Joint Ventures (ASC 323). The cumulative effect of this
accounting change was immaterial to prior fiscal years, has increased the Companys equity
investment as of January 1, 2011 by approximately $0.6 million and has increased net income by
approximately $0.1 million and $0.6 million for the three and nine months ended January 1, 2011,
respectively.
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. Fiscal 2010 was a 53-week fiscal
year and as a result the nine months ended January 2, 2010 included 40 weeks compared to 39 weeks
for the nine months ended January 1, 2011.
7
Table of Contents
RF MICRO DEVICES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)
2. NET INCOME PER SHARE
The following table sets forth a reconciliation of the numerators and denominators in the
computation of basic and diluted net income per share (in thousands, except per share data):
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
January 1, 2011 | January 2, 2010 | January 1, 2011 | January 2, 2010 | ||||||||||||||||||||
Numerator for basic and diluted net income
per share: |
|||||||||||||||||||||||
Net income available to common shareholders |
$ | 36,686 | $ | 24,928 | $ | 100,424 | $ | 44,291 | |||||||||||||||
Plus: Income impact of assumed conversions for
interest on 2010 convertible notes |
| 298 | 27 | 1,498 | |||||||||||||||||||
Net income plus assumed conversion of
notes Numerator for diluted net income
per share |
$ | 36,686 | $ | 25,226 | $ | 100,451 | $ | 45,789 | |||||||||||||||
Denominator: |
|||||||||||||||||||||||
Denominator for basic net income per
share weighted average shares |
275,009 | 268,287 | 272,316 | 266,995 | |||||||||||||||||||
Effect of dilutive securities: |
|||||||||||||||||||||||
Employee stock options |
9,143 | 4,963 | 6,756 | 4,365 | |||||||||||||||||||
Assumed conversion of 2010 convertible notes |
| 12,657 | 421 | 22,427 | |||||||||||||||||||
Denominator for diluted net income per
share adjusted weighted average shares
and assumed conversions |
284,152 | 285,907 | 279,493 | 293,787 | |||||||||||||||||||
Basic net income per share |
$ | 0.13 | $ | 0.09 | $ | 0.37 | $ | 0.17 | |||||||||||||||
Diluted net income per share |
$ | 0.13 | $ | 0.09 | $ | 0.36 | $ | 0.16 | |||||||||||||||
In the computation of diluted net income per share for the three and nine months ended January
1, 2011, outstanding stock options to purchase approximately 1.9 million shares and 11.4 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 income per share for the three and nine
months ended January 2, 2010, outstanding stock options to purchase approximately 17.1 million
shares and 18.2 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.
On July 1, 2010, the Company repaid the $10.0 million outstanding principal balance plus accrued
interest on the Companys 1.50% convertible subordinated notes (the 2010 Notes) and the
conversion option of the 2010 Notes expired unexercised. As a result, the computation of diluted net
income per share for the three months ended January 1, 2011 did not
assume the conversion of the 2010 Notes. The computation of diluted net income per share for the nine months ended January 1,
2011 includes the effect of the shares that could have been issued upon conversion of the
remaining $10.0 million balance of the Companys 2010 Notes prior to their maturity on July 1, 2010
(a total of approximately 0.4 million shares).
The computation of diluted net income per share assumed the conversion of the 2010 Notes for both
the three and nine months ended January 2, 2010.
The computation of diluted net income per share does not assume the conversion of the Companys
$200 million initial aggregate principal amount of 0.75% Convertible Subordinated Notes due 2012
(the 2012 Notes) or the $175 million initial aggregate principal amount of 1.00% Convertible
Subordinated Notes due 2014 (the 2014 Notes). Upon conversion
8
Table of Contents
RF MICRO DEVICES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)
2. NET INCOME PER SHARE (continued)
of each $1,000 principal amount of 2012 Notes and 2014 Notes, a holder will receive in lieu of common
stock, an amount in cash equal to the lesser of (1) $1,000 or (2) the conversion value. If the
conversion value exceeds $1,000 on the conversion date, the Company, at its election, will settle
the value in excess of $1,000 in cash or common stock. The Company will use the treasury stock
method to account for the conversion value in excess of the $1,000 principal amount as the
conversion becomes applicable. Pursuant to the applicable indentures governing the 2012 Notes and
2014 Notes, the conversion value generally is determined as set forth below in Note 5 to the
Condensed Consolidated Financial Statements. The 2012 Notes and 2014 Notes generally would become
dilutive to earnings if the average market price of the Companys common stock exceeds
approximately $8.05 per share. The maximum number of shares issuable upon conversion of the 2012
Notes and 2014 Notes as of January 1, 2011 is approximately 22.5 million shares (excluding an
aggregate of $142.4 million principal amount of the Notes which were previously purchased and
retired by the Company), which may be adjusted as a result of stock splits, stock dividends and
antidilution provisions.
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):
January 1, 2011 | April 3, 2010 | |||||||
Raw materials |
$ | 37,183 | $ | 29,321 | ||||
Work in process |
43,614 | 46,208 | ||||||
Finished goods |
52,643 | 46,980 | ||||||
Total inventories |
$ | 133,440 | $ | 122,509 | ||||
4. OTHER COMPREHENSIVE INCOME
Accumulated other comprehensive income for the Company consists of accumulated unrealized gains
(losses) on marketable securities, foreign currency translation adjustments and amortization of
unrealized actuarial pension valuation gain. This amount is included as a separate component of
shareholders equity. Comprehensive income is not materially different than net income for both
the three and nine months ended January 1, 2011 and January 2, 2010.
5. DEBT
Debt balances at January 1, 2011 and April 3, 2010 are as follows (in thousands):
January 1, 2011 | April 3, 2010 | |||||||
Convertible subordinated notes due 2010, net of discount |
$ | | $ | 9,944 | ||||
Convertible subordinated notes due 2012, net of discount |
90,091 | 173,747 | ||||||
Convertible subordinated notes due 2014, net of discount |
110,302 | 105,499 | ||||||
Bank loan |
6,975 | 6,739 | ||||||
No net cost credit line |
| 12,900 | ||||||
Equipment term loan, net of discount |
5,169 | 8,961 | ||||||
Subtotal |
212,537 | 317,790 | ||||||
Less current portion |
5,169 | 27,953 | ||||||
Total long-term debt |
$ | 207,368 | $ | 289,837 | ||||
9
Table of Contents
RF MICRO DEVICES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)
5. DEBT (continued)
Aggregate debt maturities as of January 1, 2011 are as follows (in thousands):
Fiscal Years |
||||
2011 |
$ | 1,320 | ||
2012 |
3,849 | |||
2013 |
97,066 | |||
2014 |
| |||
2015 and thereafter |
110,302 | |||
Total |
$ | 212,537 | ||
Convertible Debt
In April 2007, the Company issued $200 million aggregate principal amount of 2012 Notes and $175
million aggregate principal amount of 2014 Notes (together, the Notes). The two series of Notes
were issued in a private placement to Merrill Lynch, Pierce, Fenner & Smith Incorporated for resale
to qualified institutional buyers. Interest on both series of the Notes is payable in cash
semiannually in arrears on April 15 and October 15 of each year. The 2012 Notes mature on April
15, 2012, and the 2014 Notes mature on April 15, 2014. Both series of the Notes are subordinated
unsecured obligations of the Company and rank junior in right of payment to all of the Companys
existing and future senior debt. The Notes effectively are subordinated to the indebtedness and
other liabilities of the Companys subsidiaries.
During the second quarter of fiscal 2011, the Company purchased and retired $100.0 million original
principal amount of its 2012 Notes for $97.0 million, which resulted in a loss of approximately
$1.6 million. The impact to the Companys financial statements related to this purchase and
retirement of the 2012 Notes was as follows as of January 1,
2011: (i) the principal balance was
reduced to a balance of $97.7 million as of January 1, 2011 from a balance of $197.7 million as of
April 3, 2010; (ii) the unamortized discount of the liability component is $7.7 million as of
January 1, 2011 compared to $24.0 million as of April 3, 2010; (iii) the balance of the equity
component is $27.6 million as of January 1, 2011 as compared to a balance of $31.3 million as of
April 3, 2010; and (iv) non-cash interest expense is $1.4 million and $5.9 million for the three
and nine months ended January 1, 2011, respectively, compared to non-cash interest expense of $2.7
million and $8.1 million for the three and nine months ended January 2, 2010, respectively.
During fiscal 2010, the Company purchased and retired $2.3 million original principal amount of
2012 Notes at an average price of $78.56, which resulted in a gain of approximately $0.3 million.
The 2012 Notes had a fair value on the Private Offerings, Resale and Trading through Automated
Linkages (PORTAL) Market of $108.3 million as of January 1, 2011 (excluding $102.3 million of the
original principal amount of the 2012 Notes that were purchased and retired) and $182.9 million as
of January 2, 2010 (excluding $2.3 million of the original principal amount of the 2012 Notes that
were purchased and retired).
During fiscal 2010, the Company purchased and retired $7.8 million original principal amount of
2014 Notes at an average price of $61.55, which resulted in a gain of approximately $1.6 million.
During fiscal 2009, the Company purchased and retired $32.3 million principal amount of the 2014
Notes at an average price of $41.47, which resulted in a gain of approximately $10.6 million.
The 2014 Notes had a fair value on the PORTAL Market of $152.3 million as of January 1, 2011 and
$118.2 million as of January 2, 2010 (both years excluded $40.1 million of the original principal
amount of the 2014 Notes that were purchased and retired).
In accordance with the Financial Accounting Standards Board (FASB) Accounting Standards
Codification (ASC) 470-20, Debt Debt with Conversions and Other Options (ASC 470-20), the
Company records gains and losses on the early retirement of its 2012 Notes and 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.
10
Table of Contents
RF MICRO DEVICES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)
5. DEBT (continued)
In July 2003, the Company completed the private placement of $230.0 million aggregate principal
amount of its 2010 Notes. During fiscal 2009, the Company purchased and retired $23.0 million of
the original principal amount of the 2010 Notes at an average price of $82.83, which resulted in a
gain of approximately $3.8 million. During fiscal 2010, the Company purchased and retired, at 100%
of the original principal amount, $197.0 million of the 2010 Notes, which resulted in a loss of
$0.4 million due to the write-off of the unamortized discount and debt issuance cost. On July 1,
2010, the remaining $10.0 million aggregate principal amount of the 2010 Notes matured and was
repaid by the Company using cash on hand.
No Net
Cost Credit Line
In November 2008, the Company entered into an agreement with the securities firm that held the
Companys Level 3 auction rate securities (ARS) under which the securities firm gave the Company
the right to sell its outstanding Level 3 ARS to the securities firm at par value (i.e., the face
amount), plus accrued but unpaid dividends or interest, at any time during the period of June 30,
2010, through July 2, 2012. As part of the agreement, the Company executed on a no net cost
credit line option (Credit Line Agreement), which means that the interest that the Company owed on
the credit line obligation would not exceed the interest that the Company receives on its Level 3
ARS, which were pledged as first priority collateral for this loan. Pursuant to the terms and
conditions of the Credit Line Agreement, the Company borrowed up to 75% of the market value of its
outstanding Level 3 ARS. In the first quarter of fiscal 2011, the Company executed on its right to
sell its outstanding level 3 ARS to the securities firm at par value (i.e., the face amount), plus
accrued but unpaid dividends or interest. The no net cost loan was repaid with a portion of the
proceeds from the sale.
6. INCOME TAXES
Income Tax Expense
The Companys provision for income taxes for the reporting periods ended January 1, 2011 and
January 2, 2010 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 reporting period.
Income tax expense for the three months ended January 1, 2011 was $3.6 million, which is comprised
primarily of tax expense related to domestic and international operations offset by tax benefits
related to changes in the domestic and foreign deferred tax asset valuation allowances and tax
expense related to the resolution of prior year tax issues in foreign jurisdictions. Income tax
expense for the three months ended January 2, 2010 was $2.8 million, which is comprised primarily
of tax expense related to domestic and international operations offset by a tax benefit related to
changes in the domestic and foreign deferred tax asset valuation allowances, tax expense related to
the settlement of the North Carolina audit of fiscal 2006 through 2008, and tax benefit from the
carryback of fiscal 2009 federal losses.
Income tax expense for the nine months ended January 1, 2011 was $14.0 million, which is comprised
primarily of tax expense related to domestic and international operations offset by tax benefits
related to changes in the domestic and foreign deferred tax asset valuation allowances and the
expiration of the statute of limitations on uncertain tax positions assumed in prior business
combinations. Income tax expense for the nine months ended January 2, 2010 was $9.4 million, which
is comprised primarily of tax expense related to domestic and international operations offset by
tax benefit related to changes in the domestic and foreign deferred tax asset valuation allowances,
tax expense related to finalizing the Advance Pricing Agreement and related adjustments with China
tax authorities for calendar years 2006, 2007 and 2008, tax expense related to the settlement of
the North Carolina audit of fiscal 2006 through 2008, and tax benefit from the carryback of fiscal
2009 federal losses.
The Companys effective tax rate for the three months ended January 1, 2011 and January 2, 2010 was
8.9% and 10.2%, respectively. The Companys effective tax rate for the third quarter of fiscal
2011 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 and foreign deferred tax assets, and
resolution of prior year tax issues in foreign jurisdictions. The Companys effective tax rate for
the third quarter of fiscal 2010 differed from the statutory rate primarily due to tax rate
differences in foreign jurisdictions, state income taxes, domestic tax credits generated, and
adjustments to the valuation allowance limiting the recognition of the benefit of domestic and
foreign deferred tax assets, tax expense related to the settlement of the North Carolina audit of
fiscal 2006 through 2008, and tax benefit from the carryback of fiscal 2009 federal losses.
11
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RF MICRO DEVICES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)
6. INCOME TAXES (continued)
The Companys effective tax rate for the nine months ended January 1, 2011 and January 2, 2010, was
12.2% and 17.5%, respectively. The Companys effective tax rate through the third quarter of
fiscal 2011 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 and foreign deferred tax assets,
resolution of prior year issues in Japan and Germany, and the expiration of the statute of
limitations on uncertain tax positions assumed in prior business combinations. The Companys
effective tax rate through the third quarter of fiscal 2010 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 and foreign deferred tax assets, settlement of the China Advance Pricing Agreement
adjustments for calendar years 2006, 2007 and 2008, tax expense related to the settlement of the
North Carolina audit of fiscal 2006 through 2008, and tax benefit from the carryback of fiscal 2009
federal losses.
Deferred Taxes
The Company intends to maintain a valuation allowance in the majority of its taxing jurisdictions
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 has
operations. The valuation allowance against net deferred tax assets has decreased by $15.6 million
from the $132.1 million balance as of the end of fiscal 2010.
The Company has outstanding net operating loss carryforwards (NOLs) for domestic federal tax
purposes and state loss carryovers that will begin to expire in fiscal 2012 and fiscal 2011,
respectively, if unused. Included in these amounts are certain NOLs and other tax attribute assets
acquired in conjunction with the Companys acquisitions of Resonext Communications, Inc., Silicon
Wave, Inc., and Sirenza Microdevices, Inc. The utilization of acquired assets may be subject to
certain annual limitations as required under Internal Revenue Code Section 382 and similar state
tax provisions. In addition, the Company has U.K. and German loss
carryovers that carry forward
indefinitely. The U.K. loss carryovers were acquired in connection with the acquisition of
Filtronic Compound Semiconductors, Limited (Filtronic) and potentially are subject to limitation
under U.K. tax provisions.
Uncertain Tax Positions
The Companys gross unrecognized tax benefits increased from $31.8 million as of the end of fiscal
2010 to $33.9 million as of the end of the third quarter of fiscal 2011, with the change arising
from a $2.8 million increase related to tax positions taken with respect to the current fiscal year
and a decrease of $0.7 million (plus $0.2 million of accrued interest and $0.1 million of
penalties) related to the expiration of statutes of limitations in jurisdictions where tax
contingencies had been recorded in prior years.
Fiscal 2007 and subsequent tax years remain open for examination by the U.S. federal taxing
authorities. Other material jurisdictions that are subject to examination by tax authorities are
North Carolina (fiscal 2009 through present), California (fiscal 2006 through present), the U.K.
(fiscal 2002 through present), Germany (calendar year 2005 through present), and China (calendar
year 2000 through present).
7. RESTRUCTURING
During the second half of fiscal 2009, the Company initiated a restructuring to reduce
manufacturing capacity and costs and operating expenses primarily due to lower demand for its
products resulting from the global economic slowdown. The restructuring decreased the Companys
workforce and resulted in the impairment of certain property and equipment, among other charges.
The Company also outsourced certain non-core manufacturing operations and consolidated the Shanghai
test and assembly operations with its primary test and assembly facility in Beijing, China. The
Company recorded restructuring charges in other operating expense of approximately $0.1 million
and $0.4 million for the three and nine months ended January 1, 2011, primarily related to ongoing
costs for the Companys leased facilities. For the three and nine months ended January 2, 2010,
the Company recorded restructuring charges of approximately $0.3 million and $2.6 million related
to one-time employee termination benefits, impaired assets (including property and equipment) and
lease and other contract
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RF MICRO DEVICES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)
7. RESTRUCTURING (continued)
termination costs. The Company has incurred restructuring charges of approximately $70.3 million
since the initiation of this restructuring in fiscal 2009. The restructuring relating to the
adverse macroeconomic business environment is substantially complete and the Company expects to
incur approximately $3.6 million of additional restructuring charges associated with the ongoing
costs for the Companys leased facilities. The current and long-term restructuring obligations
totaled $8.8 million and $9.7 million at January 1, 2011 and April 3, 2010, respectively, and
primarily relate to the Companys leased facilities.
In the first quarter of fiscal 2009, the Company initiated a restructuring to reduce or eliminate
its investment in wireless systems, including cellular transceivers and GPS solutions, in order to
focus on RF component opportunities. Additionally, the Company consolidated its production test
facilities in an effort to reduce cycle time, better serve its customer base and improve its
overall profitability. As part of this restructuring, the Company reduced its global workforce by
approximately 10 percent. The Company recorded restructuring charges in other operating expense
of less than $0.1 million for both the three and nine months ended January 1, 2011, primarily
related to ongoing costs for the Companys leased facilities. For the three and nine months ended
January 2, 2010, the Company recorded restructuring charges of approximately $0.2 million and $1.0
million related to one-time employee termination benefits, impaired assets (including property and
equipment) and lease and other contract termination costs. The Company has incurred a total of
$48.0 million since the initiation of this restructuring in fiscal 2009. The fiscal 2009
restructuring to reduce or eliminate investments in wireless systems is substantially completed.
The Company expects to incur approximately $1.2 million of additional restructuring charges
associated with the ongoing costs of the Companys leased facilities. The current and long-term
restructuring obligations totaled $1.2 million and $1.6 million at January 1, 2011 and April 3,
2010, respectively, and relate to the Companys leased facilities.
8. INVESTMENTS AND FAIR VALUE MEASUREMENTS
Available-For-Sale
The following is a summary of available-for-sale securities as of January 1, 2011 and April 3, 2010
(in thousands):
Available-for-Sale Securities | |||||||||||||||||||||||
Gross | Gross | ||||||||||||||||||||||
Unrealized | Unrealized | Estimated Fair | |||||||||||||||||||||
Cost | Gains | Losses | Value | ||||||||||||||||||||
January 1, 2011 |
|||||||||||||||||||||||
U.S. government/agency securities |
$ | 145,891 | $ | 13 | $ | (1 | ) | $ | 145,903 | ||||||||||||||
Auction rate securities |
2,150 | | | 2,150 | |||||||||||||||||||
Money market funds |
63,606 | | | 63,606 | |||||||||||||||||||
$ | 211,647 | $ | 13 | $ | (1 | ) | $ | 211,659 | |||||||||||||||
April 3, 2010 |
|||||||||||||||||||||||
U.S. government/agency securities |
$ | 134,897 | $ | 5 | $ | (20 | ) | $ | 134,882 | ||||||||||||||
Auction rate securities |
2,175 | | | 2,175 | |||||||||||||||||||
Money market funds |
40,593 | | | 40,593 | |||||||||||||||||||
$ | 177,665 | $ | 5 | $ | (20 | ) | $ | 177,650 | |||||||||||||||
The estimated fair value of available-for-sale securities was based on the prevailing market values
on January 1, 2011 and April 3, 2010. We determine the cost of an investment sold based on the
specific identification method.
There were no gross realized gains or losses recognized on available-for-sale securities for the
three months ended January 1, 2011. For the nine months ended January 1, 2011, gross realized
gains and losses recognized on available-for-sale securities were insignificant. Less than $0.1
million gross realized gains on available-for-sale securities were included in earnings in the
three and nine months ended January 2, 2010.
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RF MICRO DEVICES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)
8. INVESTMENTS AND FAIR VALUE MEASUREMENTS (continued)
No available-for-sale investments were in a continuous unrealized loss position as of January 1,
2011. The available-for-sale investments that were in a continuous unrealized loss position for
less than 12 months as of April 3, 2010 consisted of U.S. government/agency securities with gross
unrealized losses of less than $0.1 million and an aggregate fair value of approximately $83.9
million.
The amortized cost of available-for-sale investments in debt securities with contractual
maturities is as follows (in thousands):
January 1, 2011 | April 3, 2010 | |||||||||||||||
Estimated | Estimated | |||||||||||||||
Cost | Fair Value | Cost | Fair Value | |||||||||||||
Due in less than one year |
$ | 209,497 | $ | 209,509 | $ | 175,490 | $ | 175,475 | ||||||||
Due after ten years |
2,150 | 2,150 | 2,175 | 2,175 | ||||||||||||
Total investments in debt securities |
$ | 211,647 | $ | 211,659 | $ | 177,665 | $ | 177,650 | ||||||||
Fair Value Measurements
On a quarterly basis, the Company measures the fair value of its marketable securities and trading
securities, which are comprised of U.S. government/agency securities, ARS, and money market funds.
Marketable securities are reported in cash and cash equivalents, short-term investments and
long-term investments on the Companys consolidated balance sheet and are recorded at fair value
and the related unrealized gains and losses are included in accumulated other comprehensive income,
a component of shareholders equity, net of tax. Trading securities are included in restricted
trading security investments with the related unrealized gains and losses recorded in earnings.
ASC Topic 820, Fair Value Measurements and Disclosures, specifies a hierarchy of valuation
techniques based on whether the inputs to those valuation techniques are observable or
unobservable. Observable inputs reflect market data obtained from independent sources, while
unobservable inputs reflect the Companys market assumptions. These two types of inputs have
created the following fair-value hierarchy:
| Level 1 Quoted prices for identical instruments in active markets; | ||
| Level 2 Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets; and | ||
| Level 3 Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. |
This hierarchy requires the Company to minimize the use of unobservable inputs and to use
observable market data, if available, when determining fair value.
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RF MICRO DEVICES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)
8. INVESTMENTS AND FAIR VALUE MEASUREMENTS (continued)
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 January 1, 2011 and April 3, 2010 (in thousands):
Quoted Prices In | ||||||||||||||||
Active Markets For | Significant Other | Significant | ||||||||||||||
Identical Assets | Observable Inputs | Unobservable Inputs | ||||||||||||||
Total | (Level 1) | (Level 2) | (Level 3) | |||||||||||||
January 1, 2011 |
||||||||||||||||
U.S.
government/agency
securities |
$ | 145,903 | $ | 145,903 | $ | | $ | | ||||||||
Auction rate securities |
2,150 | | 2,150 | | ||||||||||||
Money market funds |
63,606 | 63,606 | | | ||||||||||||
$ | 211,659 | $ | 209,509 | $ | 2,150 | $ | | |||||||||
April 3, 2010 |
||||||||||||||||
U.S.
government/agency
securities |
$ | 134,882 | $ | 134,882 | $ | | $ | | ||||||||
Auction rate securities |
19,423 | | 2,175 | 17,248 | ||||||||||||
Put option |
2,302 | | | 2,302 | ||||||||||||
Money market funds |
40,593 | 40,593 | | | ||||||||||||
$ | 197,200 | $ | 175,475 | $ | 2,175 | $ | 19,550 | |||||||||
ARS are debt instruments with interest rates that reset through periodic short-term auctions. The
Companys Level 2 ARS are valued at par based on quoted prices for identical or similar instruments
in markets that are not active.
As of April 3, 2010, the Companys Level 3 ARS consisted of AAA rated securities issued primarily
by student loan corporations, which were municipalities of various U.S. state governments. These
Level 3 ARS were not liquid and the fair values of the student loan ARS could not be estimated
based on observable market prices. The Company estimated the Level 3 ARS fair values with the
assistance of a third party investment advisor using a discounted cash flow model. The assumptions
used in preparing the discounted cash flow model included the expected timing of successful
auctions or refinancings in the future, the composition and quality of the underlying collateral
and the creditworthiness of the issuer, and
the probability of full repayment considering the guarantees by Federal Family Education Loan
Program (FFELP) of the underlying student loans.
In the third quarter of fiscal 2009, the Company accepted a settlement agreement with the
securities firm from which the Company purchased all of its Level 3 ARS. The securities firm had
reached a settlement with the SEC and various state regulatory agencies under which the securities
firm agreed to restore liquidity to certain clients holding ARS. In accordance with this
settlement, the securities firm agreed for the Company to have the right to sell its outstanding
Level 3 ARS to the securities firm at par value (i.e., the face amount), plus accrued but unpaid
dividends or interest, at any time during the period of June 30, 2010, through July 2, 2012. In
addition, the securities firm agreed to provide the Company with a no net cost credit line of up
to 75% of the market value of its outstanding Level 3 ARS pending the securities firms purchase of
the Companys ARS. The settlement feature entered into under this settlement agreement is a
separate freestanding instrument accounted for separately from the ARS, is a registered,
nontransferable security and was accounted for as a put option. The Company elected fair value
accounting in order to mitigate volatility in earnings caused by accounting for the put option and
underlying ARS under different methods. The Company determined the fair value of the settlement
option using a probability-weighted cash flow analysis with varying assumptions for the amount and
timing of potential cash flows.
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RF MICRO DEVICES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)
8. INVESTMENTS AND FAIR VALUE MEASUREMENTS (continued)
In the first quarter of fiscal 2011, the Company executed on its right to sell its outstanding
Level 3 ARS to the securities firm at par value (i.e., the face amount), plus accrued but unpaid
dividends or interest. Prior to the settlement, the Companys Level 3 ARS were classified as
restricted trading security investments on its Condensed Consolidated Balance Sheet as these ARS
securities were pledged as collateral for the no net cost credit line. The no net cost loan
was repaid with a portion of the proceeds from the sale (see Note 5 to the Condensed Consolidated
Financial Statements). Due to the sale of the Level 3 ARS, the Companys put option was settled
and other current assets was reduced.
During the nine months ended January 1, 2011, the changes in the assets measured on a recurring
basis using significant unobservable inputs (Level 3) were comprised of the following (in
thousands):
Auction Rate Securities |
Put Option | ||||||||||||||||||||||
Level 3 balance at April 3, 2010 |
$ | 17,248 | $ | 2,302 | |||||||||||||||||||
Settlement of ARS (first quarter of fiscal 2011) |
(17,248 | ) | (2,302 | ) | |||||||||||||||||||
Level 3 balance at January 1, 2011 |
$ | | $ | | |||||||||||||||||||
Nonrecurring Fair Value Measurements
The Companys non-financial assets, such as goodwill, 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. The Company did not have any non-financial assets or
liabilities measured at fair value during the nine months ended January 1, 2011. For the three and
nine months ended January 2, 2010, the Company recorded an impairment of $0.1 million and $0.7
million, respectively, of certain property and equipment. As of January 2, 2010, the fair value of
these impaired assets was estimated to be $0.3 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 Companys historical experience.
Financial Instruments Not Recorded at Fair Value
The carrying values of cash and cash equivalents, short-term investments, accounts receivable,
accounts payable and other accrued liabilities, approximate fair value as of January 1, 2011 and
April 3, 2010. See Note 5 to the Condensed Consolidated Financial Statements for a discussion of
the fair value of our debt instruments.
9. SUBSEQUENT EVENT
On January 25, 2011, the Company announced that its Board of Directors authorized the repurchase of
up to $200.0 million of its 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 the Company to repurchase shares
through solicited or unsolicited transactions in the open market or in privately negotiated
transactions.
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Table of Contents
ITEM 2. MANAGEMENTS 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 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; |
| the risk that certain of our suppliers may be unable to access their traditional sources of credit to finance their operations, which could lead them to reduce their level of support for us; |
| our ability to continue to improve our product designs and develop new products in response to new technologies; |
| 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 the operation of our molecular beam epitaxy (MBE) facility, our wafer fabrication facilities, our assembly facility and our test and tape and reel facilities; |
| variability in manufacturing yields, raw material costs and availability; |
| our dependence on third parties, including wafer foundries, passive component manufacturers, assembly and packaging suppliers and test and tape and reel suppliers; |
| our ability to manage channel partner and customer relationships; | ||
| 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. |
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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.
OVERVIEW
The following Managements Discussion and Analysis (MD&A) is intended to help the reader
understand the 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 global leader in the design and manufacture of high-performance radio frequency (RF)
components and compound semiconductor technologies. Our products enable worldwide mobility,
provide enhanced connectivity and support advanced functionality in the cellular handset, wireless
infrastructure, wireless local area network or WiFi, cable television (CATV)/broadband 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 worlds leading
mobile device, customer premises and communications equipment providers.
THIRD QUARTER FISCAL 2011 FINANCIAL HIGHLIGHTS:
| Quarterly revenue increased by 11.4% as compared to the corresponding quarter of fiscal 2010. Sales of our cellular products increased year-over-year driven primarily by our customer diversification initiatives and increased demand for new and existing products. In addition, sales of our multi-market products increased year-over-year primarily due to an increase in demand for a broad range of wireless and wired applications. | |
| Gross margin for the quarter was 37.0% as compared to 36.4% in the corresponding quarter of fiscal 2010. The improvement in gross margin reflected improved factory utilization, improved pricing on externally-sourced materials and the transition to new products with an improved cost structure. These improvements were partially offset by erosion in average selling prices. | |
| Operating income was $43.3 million for the third quarter of fiscal 2011 as compared to $33.6 million for the corresponding quarter of fiscal 2010. Our operating income increased as a result of an increase in revenue and an increase in gross profit. | |
| Cash flow from operations was $63.3 million for the third quarter of fiscal 2011 as compared to $44.5 million for the third quarter of fiscal 2010. This year-over-year increase was primarily attributable to improved profitability and an increase in cash receipts associated with value added tax (VAT) refunds from China. | |
| Inventory totaled $133.4 million at January 1, 2011, reflecting turns of 5.3 as compared to $121.5 million and turns of 5.2 at January 2, 2010. |
The following tables present a summary of our results of operations for the three and nine months
ended January 1, 2011 and January 2, 2010. Our fiscal 2011 year consists of 52 weeks compared to
our fiscal 2010 year which consisted of 53 weeks. This additional week in fiscal 2010 impacts the
year-over-year analysis as the nine months ended January 2, 2010 included 40 weeks compared to 39
weeks for the nine months ended January 1, 2011.
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Table of Contents
Three Months Ended | ||||||||||||||||||||||||
January 1, | % of | January 2, | % of | Increase | Percentage | |||||||||||||||||||
(In thousands, except percentages) | 2011 | Revenue | 2010 | Revenue | (Decrease) | Change | ||||||||||||||||||
Revenue |
$ | 278,794 | 100.0 | % | $ | 250,271 | 100.0 | % | $ | 28,523 | 11.4 | % | ||||||||||||
Cost of goods sold |
175,705 | 63.0 | 159,081 | 63.6 | 16,624 | 10.5 | ||||||||||||||||||
Research and development |
33,920 | 12.2 | 32,997 | 13.2 | 923 | 2.8 | ||||||||||||||||||
Marketing and selling |
14,621 | 5.2 | 13,821 | 5.5 | 800 | 5.8 | ||||||||||||||||||
General and administrative |
11,036 | 4.0 | 9,496 | 3.8 | 1,540 | 16.2 | ||||||||||||||||||
Other operating expense |
192 | 0.1 | 1,288 | 0.5 | (1,096 | ) | (85.1 | ) | ||||||||||||||||
Operating income |
$ | 43,320 | 15.5 | % | $ | 33,588 | 13.4 | % | 9,732 | 29.0 | ||||||||||||||
Nine Months Ended | ||||||||||||||||||||||||
January 1, | % of | January 2, | % of | Increase | Percentage | |||||||||||||||||||
(In thousands, except percentages) | 2011 | Revenue | 2010 | Revenue | (Decrease) | Change | ||||||||||||||||||
Revenue |
$ | 838,430 | 100.0 | % | $ | 717,568 | 100.0 | % | $ | 120,862 | 16.8 | % | ||||||||||||
Cost of goods sold |
524,280 | 62.5 | 460,827 | 64.2 | 63,453 | 13.8 | ||||||||||||||||||
Research and development |
105,626 | 12.6 | 103,477 | 14.4 | 2,149 | 2.1 | ||||||||||||||||||
Marketing and selling |
44,083 | 5.3 | 42,131 | 5.9 | 1,952 | 4.6 | ||||||||||||||||||
General and administrative |
36,941 | 4.4 | 37,429 | 5.2 | (488 | ) | (1.3 | ) | ||||||||||||||||
Other operating expense |
1,229 | 0.1 | 3,937 | 0.6 | (2,708 | ) | (68.8 | ) | ||||||||||||||||
Operating income |
$ | 126,271 | 15.1 | % | $ | 69,767 | 9.7 | % | 56,504 | 81.0 | ||||||||||||||
REVENUE
Our revenue increased materially during the three and nine months ended January 1, 2011, as
compared to the corresponding periods of fiscal 2010. For the quarter, sales of our cellular
products increased year-over-year driven primarily by our customer diversification initiatives and
increased demand for new and existing products. In addition, sales of our multi-market products
increased primarily due to an increase in demand for a broad range of wireless and wired
applications. During the first nine months of fiscal 2011, our customer diversification strategy
continued to help reduce our percentage of sales to our largest customer and increase our market
share elsewhere, particularly with customers throughout Asia.
International shipments (based on the bill to address of the customer) were $234.2 million and
accounted for 84.0% of revenue for the three months ended January 1, 2011, compared to $212.6
million and 84.9% of revenue for the three months ended January 2, 2010. For the nine months ended
January 1, 2011, international shipments were $717.5 million, or 85.6% of revenue, compared to
$609.6 million, or 85.0% of revenue, for the nine months ended January 2, 2010.
OPERATING INCOME
Operating income was $43.3 million and $126.3 million for the three and nine months ended January
1, 2011, respectively, compared to operating income of $33.6 million and $69.8 million for the
three and nine months ended January 2, 2010, respectively. Our operating income increased
primarily due to an increase in revenue and an increase in gross profit. Our operating expenses
for the three and nine months ended January 1, 2011 increased slightly as compared to the three and
nine months ended January 2, 2010.
Cost of Goods Sold
Our cost of goods sold for the three and nine months ended January 1, 2011 decreased as a
percentage of revenue primarily due to improved factory utilization, improved pricing on
externally-sourced materials and the transition to new products with
an improved cost structure. These improvements to our gross margin were partially offset by
erosion in average selling prices.
Operating Expenses
Research and development, marketing and selling and general and administrative expenses for the
three and nine months ended January 1, 2011 increased slightly in absolute dollars as compared to
the three and nine months ended January 2,
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2010. These expenses totaled 21.4% of revenue and 22.3%
of revenue for the three and nine months ended January 1, 2011 as compared to 22.5% of revenue and
25.5% of revenue for the three and nine months ended January 2, 2010.
Other Operating Expense
Other operating expenses decreased primarily due to lower restructuring charges. In the three and
nine months ended January 1, 2011, we recorded restructuring charges of approximately $0.1 million
and $0.4 million related to lease and other contract termination costs. We recorded restructuring
charges of approximately $0.5 million and $3.6 million for the three and nine months ended January
2, 2010, respectively, related to one-time employee termination expenses, impaired assets and lease
and other contract termination costs (see Note 7 to the Condensed Consolidated Financial
Statements).
OTHER (EXPENSE) INCOME AND INCOME TAXES
Three Months Ended | Nine Months Ended | |||||||||||||||
January 1, | January 2, | January 1, | January 2, | |||||||||||||
(In thousands) | 2011 | 2010 | 2011 | 2010 | ||||||||||||
Interest expense |
$ | (3,800 | ) | $ | (5,863 | ) | $ | (13,329 | ) | $ | (18,537 | ) | ||||
Interest income |
124 | 317 | 619 | 1,063 | ||||||||||||
(Loss) gain on retirement of convertible
subordinated notes |
| (408 | ) | (1,646 | ) | 1,540 | ||||||||||
Other income (expense) |
642 | 126 | 2,505 | (139 | ) | |||||||||||
Income tax expense |
(3,600 | ) | (2,832 | ) | (13,996 | ) | (9,403 | ) |
Interest Expense
Interest expense decreased for the three and nine months ended January 1, 2011 as compared to the
three and nine months ended January 2, 2010, primarily due to the purchase and early retirement of
$100 million original principal amount of the 2012 Notes in the second quarter of fiscal 2011 and
the purchase and early retirement of $197.0 million original principal amount of the 2010 Notes in
the third quarter of fiscal 2010. In addition, the remaining $10.0 million balance of our 2010
Notes matured and was repaid on July 1, 2010.
Our interest expense included cash interest of $0.7 million and $2.6 million for the three and nine
months ended January 1, 2011, respectively, compared to cash interest of $1.5 million and $5.2
million for the three and nine months ended January 2, 2010, respectively.
Interest Income
Interest income decreased due to a lower average balance of total investments coupled with lower
prevailing interest rates.
(Loss) Gain on the Retirement of Convertible Subordinated Notes
In the second quarter of fiscal 2011, we purchased and retired $100.0 million original principal
amount of our 2012 Notes for $97.0 million, which resulted in a loss of approximately $1.6 million
as a result of applying ASC 470-20. In the first quarter of fiscal 2010, we purchased and retired
an aggregate of $10.0 million original principal amount of the 2012 Notes and 2014 Notes, which
resulted in a gain of approximately $1.9 million as a result of applying ASC 470-20. In the third
quarter of fiscal 2010, we purchased and retired, at 100% of the original principal amount, $197.0
million of the 2010 Notes, which resulted in a loss of $0.4 million due to the write off of the
unamortized discount and debt issuance costs. ASC 470-20 requires us to record gains and losses on
the early retirement of our 2012 Notes and 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.
Other Income (Expense)
The increase in other income (expense) for the three and nine months ended January 1, 2011 is
primarily related to the foreign currency exchange rate impact on our Renminbi (or Yuan) and Euro
denominated accounts as the balances change and the exchange rates fluctuate in relation to the
U.S. dollar.
Income Taxes
Our provision for income taxes for the reporting periods ended January 1, 2011 and January 2, 2010
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 reporting period.
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Income tax expense for the three months ended January 1, 2011 was $3.6 million, which is comprised
primarily of tax expense related to domestic and international operations offset by tax benefits
related to changes in the domestic and foreign deferred tax asset valuation allowances and tax
expense related to resolution of prior year tax issues in foreign jurisdictions. Income tax
expense for the three months ended January 2, 2010 was $2.8 million, which is comprised primarily
of tax expense related to domestic and international operations, offset by tax benefit related to
changes in the domestic and foreign deferred tax asset valuation allowances, tax expense related to
the settlement of the North Carolina audit of fiscal 2006 through 2008, and tax benefit from the
carryback of fiscal 2009 federal losses.
Income tax expense for the nine months ended January 1, 2011 was $14.0 million, which is comprised
primarily of tax expense related to domestic and international operations offset by tax benefits
related to changes in the domestic and foreign deferred tax asset valuation allowances, and the
expiration of the statute of limitations on uncertain tax positions assumed in prior business
combinations. Income tax expense for the nine months ended January 2, 2010 was $9.4 million, which
is comprised primarily of tax expense related to domestic and international operations offset by a
tax benefit related to changes in the domestic and foreign deferred tax asset valuation allowances,
tax expense related to finalizing the Advance Pricing Agreement and related adjustments with China
tax authorities for calendar years 2006, 2007 and 2008, tax expense related to the settlement of
the North Carolina audit of fiscal 2006 through 2008, and tax benefit from the carryback of fiscal
2009 federal losses.
We intend to maintain a valuation allowance 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. The valuation allowance against net deferred tax assets
has decreased by $15.6 million from the $132.1 million balance as of the end of fiscal 2010.
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 January
1, 2011, we had working capital of approximately $480.9 million, including $158.4 million in cash
and cash equivalents, compared to working capital of approximately $356.4 million at January 2,
2010, including $121.5 million in cash and cash equivalents. As of January 1, 2011, our total
cash, cash equivalents and short-term investments balance exceeded our remaining principal amount
of 2012 Notes and 2014 Notes by $71.6 million.
On January 25, 2011, we announced that our Board of Directors authorized the repurchase of up to
$200.0 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.
Cash Flows from Operating Activities
Operating activities for the nine months ended January 1, 2011 generated cash of $177.2 million,
compared to $128.1 million for the nine months ended January 2, 2010. This year-over-year increase
was primarily attributable to improved profitability and an increase in cash receipts associated
with value added tax (VAT) refunds from China.
Cash Flows from Investing Activities
Net cash used by investing activities for the nine months ended January 1, 2011 was $11.7 million,
compared to net cash provided by investing activities of $27.5 million for the nine months ended
January 2, 2010. The decrease in cash provided by investment activities was primarily due to lower
investment activity, lower proceeds from maturities of available-for-sale securities and increased
capital expenditures related to the expansion of our manufacturing capacity during the first nine
months of fiscal 2011 as compared to the first nine months of fiscal 2010. Our capital
expenditures totaled $20.9 million for the nine months ended January 1, 2011 compared to $5.9
million for the nine months ended January 2, 2010.
Cash Flows from Financing Activities
Net cash used in financing activities was $112.5 million for the nine months ended January 1, 2011,
compared to $207.3 million for the nine months ended January 2, 2010. This decrease in cash used
in financing activities was primarily due to lower repayment of debt. During the second quarter of
2011 we purchased and retired $100.0 million original principal amount of the 2012 Notes for $97.0
million. During the first quarter of fiscal 2011 we also repaid the $12.9 million balance of a no
net cost loan (see Note 5 to the Condensed Consolidated Financial Statements). In addition, the
remaining $10.0 million balance of our 2010 Notes matured and was paid on July 1, 2010. During the
third quarter of fiscal 2010 we purchased and retired $197.0 million original principal amount of
the 2010 Notes for $197.0 million. During the first quarter
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of fiscal 2010, we paid approximately
$6.6 million related to the purchase and retirement of a portion of our 2012 Notes and 2014 Notes.
COMMITMENTS AND CONTINGENCIES
Equipment Term Loan During fiscal 2007, we entered into a $25.0 million equipment term
loan at an interest rate of 7.87%. We used the proceeds primarily for wafer fabrication and
assembly expansions. As of January 1, 2011, the outstanding balance of this loan was approximately
$5.2 million.
In connection with our equipment term loan, we must maintain, on a quarterly basis, a ratio of
senior funded debt to EBITDA of not greater than 3.5 to 1.0, and unencumbered cash or
cash-equivalent holdings of not less than $50.0 million. Senior funded debt is defined as
current-and long-term debt plus capital leases, and EBITDA is defined as (i) operating income under
GAAP, plus (ii) depreciation and amortization expense, plus (iii) all non-cash expenses and losses,
minus all non-cash income and gains. As of January 1, 2011, we were in compliance with our
equipment term loan debt covenants.
Convertible Debt During April 2007, we completed the private placement of the 2012 Notes
and the 2014 Notes. The net proceeds of the offering were approximately $366.2 million after the
payment of the underwriting discount and expenses of the offering totaling approximately $8.8
million.
In the second quarter of fiscal 2011, we purchased and retired $100.0 million original principal
amount of our 2012 Notes for $97.0 million, which resulted in a loss of approximately $1.6 million.
During fiscal 2010, we purchased and retired $2.3 million original principal amount of the 2012
Notes at an average price of $78.56, which resulted in a gain of approximately $0.3 million. As of
January 1, 2011, the 2012 Notes had a fair value of $108.3 million (excluding $102.3 million of the
original principal amount of the 2012 Notes that were purchased and retired) and $182.9 million as
of January 2, 2010 (excluding $2.3 million of the original principal amount of the 2012 Notes that
were purchased and retired).
During fiscal 2010, we purchased and retired $7.8 million original principal amount of the 2014
Notes at an average price of $61.55, which resulted in a gain of approximately $1.6 million. In
addition, during fiscal 2009, we purchased and retired $32.3 million original principal amount of
the 2014 Notes at an average price of $41.47, which resulted in a gain of approximately $10.6
million. The 2014 Notes had a fair value of $152.3 million as of January 1, 2011 and $118.2
million as of January 2, 2010 (both years excluded $40.1 million of the original principal amount
of the 2014 Notes that were purchased and retired).
During fiscal 2004, we completed the private placement of $230.0 million aggregate principal amount
of 1.50% convertible subordinated notes due July 1, 2010 (first quarter of fiscal 2011). The net
proceeds of the offering were approximately $224.7 million after payment of the underwriting
discount and expenses of the offering totaling $5.3 million. The net proceeds from the 1.50%
offering were offset by the purchase of $200.0 million of the $300.0 million aggregate principal
amount of our 3.75% convertible subordinated notes due 2005. On August 15, 2004, we redeemed the
remainder of the outstanding principal amount of the 3.75% convertible subordinated notes for
$100.0 million plus accrued interest with cash flow from operations and cash on hand. In fiscal
2009, we purchased and retired $23.0 million of the original principal amount of the 2010 Notes at
an average price of $82.83, which resulted in a gain of approximately $3.8 million and in fiscal
2010, we purchased and retired, at 100% of the original principal amount, $197.0 million of the
2010 Notes, which resulted in a loss of $0.4 million due to the write-off of the unamortized
discount and debt issuance cost. The remaining balance of $10.0 million of the 2010 Notes matured
on July 1, 2010, and was paid with cash on hand.
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.
No Net Cost Credit Line In November 2008, we entered into an agreement with the
securities firm that holds our Level 3 ARS under which the securities firm gave us the right to
sell our outstanding Level 3 ARS to the securities firm at par value
(i.e., the face amount), plus accrued but unpaid dividends or interest, at any time during the
period of June 30, 2010, through July 2, 2012. As part of the agreement, we executed on a no net
cost credit line option (Credit Line Agreement), which means that the interest that we will pay on
the credit line obligation will not exceed the interest that we receive on our Level 3 ARS, which
are pledged as first priority collateral for this loan. Pursuant to the terms and conditions of
the Credit Line Agreement, we borrowed up to 75% of the market value of our outstanding Level 3 ARS
during the third quarter of fiscal 2009. In the first quarter of fiscal 2011, we executed on our
right to sell our outstanding Level 3 ARS to the securities firm
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at par value (i.e., the face
amount), plus accrued but unpaid dividends or interest. The no net cost loan was repaid with a
portion of the proceeds from the sale.
Convertible Debt Obligations The following table summarizes our convertible debt
obligations, including interest, as of January 1, 2011, and the effect such obligations are
expected to have on our liquidity and cash flows in future periods. Other than as set forth below,
there have been no material changes outside the ordinary course of business to our contractual
obligations and commitments as set forth in our Annual Report on Form 10-K for the fiscal year
ended April 3, 2010.
Payments Due By Period (in thousands) | ||||||||||||||||||||||||
Total | Less than | More than | ||||||||||||||||||||||
Par Value | Payments | 1 year | 1-3 years | 3-5 years | 5 years | |||||||||||||||||||
Convertible
subordinated notes
due 2012 |
$ | 97,748 | $ | 98,848 | $ | 733 | $ | 98,115 | $ | | $ | | ||||||||||||
Convertible
subordinated notes
due 2014 |
134,901 | 139,623 | 1,349 | 2,698 | 135,576 | | ||||||||||||||||||
Total convertible debt |
$ | 232,649 | $ | 238,471 | $ | 2,082 | $ | 100,813 | $ | 135,576 | $ | | ||||||||||||
Capital Commitments At January 1, 2011, we had short-term capital commitments of
approximately $2.6 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, 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, we believe that we have sufficient liquidity to meet both our short-term and
long-term cash requirements. However, if current economic conditions or other factors materially
reduce the 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, additional credit facilities, enter
into sale-leaseback transactions or obtain asset-based 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, particularly given the current macroeconomic conditions.
Legal We are involved in various legal proceedings and claims that have arisen in the
ordinary course of our business that have not been fully adjudicated. These actions, when finally
concluded and determined, will not, in the opinion of management, have a material adverse effect on
our consolidated financial position or results of operations.
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.
Critical Accounting Policies and Estimates
There have been no material changes to our critical accounting policies and estimates from the
information provided in Item 7, Managements Discussion and Analysis of Financial Condition and
Results of Operations, included in our Annual Report on Form 10-K for the fiscal year ended April
3, 2010.
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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
2011. 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 April 3, 2010.
ITEM 4. | CONTROLS AND PROCEDURES. |
As of the end of the period covered by this report, the Companys management, with the
participation of the Companys Chief Executive Officer and the Chief Financial Officer, evaluated
the effectiveness of the Companys 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
Companys 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 SECs rules and forms, and (ii) is
accumulated and communicated to the Companys 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 Companys 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 Companys internal control over financial reporting.
PART II OTHER INFORMATION
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 April 3, 2010, 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.
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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 January 1, 2011, formatted in XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets as of January 1, 2011 and April 3, 2010; (ii) the Condensed Consolidated Statements of Income for the three months ended January 1, 2011 and January 2, 2010; (iii) the Condensed Consolidated Statements of Income for the nine months ended January 1, 2011 and January 2, 2010; (iv) the Consolidated Statements of Cash Flows for the nine months ended January 1, 2011 and January 2, 2010; and (v) the Notes to the Condensed Consolidated Financial Statements, tagged as blocks of text** |
** | Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections. |
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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: February 9, 2011 | /s/ William A. Priddy, Jr. | |||
William A. Priddy, Jr. | ||||
Chief Financial Officer, Corporate Vice President of Administration and Secretary (Principal Financial Officer) |
Date: February 9, 2011 | ||||
/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 January 1, 2011, formatted in XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets as of January 1, 2011 and April 3, 2010; (ii) the Condensed Consolidated Statements of Income for the three months ended January 1, 2011 and January 2, 2010; (iii) the Condensed Consolidated Statements of Income for the nine months ended January 1, 2011 and January 2, 2010; (iv) the Consolidated Statements of Cash Flows for the nine months ended January 1, 2011 and January 2, 2010; and (v) the Notes to the Condensed Consolidated Financial Statements, tagged as blocks of text** |
** | Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections. |
Our SEC file number for documents filed with the SEC pursuant to the Securities Exchange Act of
1934, as amended, is 000-22511.
27