UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

þ		ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended April 2, 2011

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                     to                    

RF Micro Devices, Inc.

(Exact name of registrant as specified in its charter)

North Carolina		56-1733461
State or other jurisdiction of		(I.R.S. Employer
incorporation or organization		Identification No.)
7628 Thorndike Road
Greensboro, North Carolina		27409-9421
(Address of principal executive offices)		(Zip Code)

(336) 664-1233
Registrant’s telephone number, including area code

Title of each class		Name of each exchange on which registered
Common Stock, no par value (Preferred		The NASDAQ Stock Market LLC
Share Purchase Rights are attached to		(NASDAQ Global Select Market)
and trade with the Common Stock)

Securities registered pursuant to Section 12(g) of the Act:
Preferred Share Purchase Rights (attached to and trade with the Common Stock)
(Title of class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes þ No o

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No þ

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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. þ

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 Act). Yes o No þ

The aggregate market value of the registrant’s common stock held by non-affiliates of the registrant was approximately $1,652,710,747 as of October 2, 2010. For purposes of such calculation, shares of common stock held by persons who hold more than 10% of the outstanding shares of common stock and shares held by directors and officers of the registrant and their immediate family members have been excluded because such persons may be deemed to be affiliates. This determination is not necessarily conclusive.

There were 276,859,815 shares of the registrant’s common stock outstanding as of May 13, 2011.

The registrant has incorporated by reference into Part III of this report certain portions of its proxy statement for its 2011 annual meeting of shareholders, which is expected to be filed pursuant to Regulation 14A within 120 days after the end of the registrant’s fiscal year ended April 2, 2011.

 

 

RF MICRO DEVICES, INC.

FORM 10-K

FOR THE FISCAL YEAR ENDED APRIL 2, 2011

INDEX

				Page
		Forward-Looking Information.			3
PART I
Item 1.		Business.			3
Item 1A.		Risk Factors.			12
Item 1B.		Unresolved Staff Comments.			21
Item 2.		Properties.			21
Item 3.		Legal Proceedings.			21
Item 4.		(Removed and Reserved).			21
PART II
Item 5.		Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.			22
Item 6.		Selected Financial Data.			25
Item 7.		Management’s Discussion and Analysis of Financial Condition and Results of Operations.			26
Item 7A.		Quantitative and Qualitative Disclosures About Market Risk.			41
Item 8.		Financial Statements and Supplementary Data.			44
Item 9.		Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.			90
Item 9A.		Controls and Procedures.			90
Item 9B.		Other Information.			90
PART III
Item 10.		Directors, Executive Officers and Corporate Governance.			90
Item 11.		Executive Compensation.			91
Item 12.		Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.			91
Item 13.		Certain Relationships and Related Transactions, and Director Independence.			91
Item 14.		Principal Accounting Fees and Services.			91
PART IV
Item 15.		Exhibits, Financial Statement Schedules.			91
Signatures.					93
Exhibit Index.					95
EX-21
EX-23
EX-31.1
EX-31.2
EX-32.1
EX-32.2
EX-101 INSTANCE DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT
EX-101 DEFINITION LINKBASE DOCUMENT

Forward-Looking Information

This report includes “forward-looking statements” within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including but not limited to certain disclosures contained in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” 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 the 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.

The following discussion should be read in conjunction with, and is qualified in its entirety by reference to, our audited consolidated financial statements, including the notes thereto.

PART I

We use a 52- or 53-week fiscal year ending on the Saturday closest to March 31 of each year. Fiscal years 2011 and 2009 were 52-week years and fiscal year 2010 was a 53-week year. Our other fiscal quarters end on the Saturday closest to June 30, September 30 and December 31 of each year.

Unless the context requires otherwise, references in this report to “RFMD,” the “Company,” “we,” “us” and “our” refer to RF Micro Devices, Inc. and its subsidiaries on a consolidated basis.

ITEM 1. BUSINESS.

Introduction

RF Micro Devices, Inc. was incorporated under the laws of the State of North Carolina in 1991. We are a recognized 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 (WLAN or WiFi), cable television (CATV)/broadband, Smart Energy/advanced metering infrastructure (AMI), 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 world’s leading mobile device, customer premises and communications equipment providers.

Our design and manufacturing expertise encompasses many semiconductor process technologies, which we access through both internal and external resources. We are a leading manufacturer of gallium arsenide (GaAs)-based and gallium nitride (GaN) compound semiconductors for RF applications. We access silicon-based technologies and a small percentage of GaAs through external foundries. Our broad design and manufacturing resources enable us to deliver products optimized for performance and cost in order to best meet our customers’ performance, cost and time-to-market requirements.

In fiscal 2011, our Cellular Products Group (CPG) supplied cellular components to the majority of the handset industry’s original equipment manufacturers (OEMs) and collaborated with the handset industry’s leading baseband manufacturers, as the reference designs of these baseband manufacturers are utilized by both OEMs and original design manufacturers (ODMs). CPG is a leading supplier of cellular components, such as power amplifier (PA) modules, transmit modules and cellular switches, which perform various functions in the cellular front end section located between the transceiver and the antenna. CPG is also a growing supplier of switch-based content in the cellular front end section, including antenna switch modules, switch filter modules and switch duplexer modules, which are increasingly required in next-generation 3G and 4G devices. CPG supplies its broad portfolio of cellular components into handsets and other mobile data connected devices, such as USB modems, netbooks, notebooks and tablets.

Our Multi-Market Products Group (MPG) supplies a broad range of RF components for multiple applications in the communications, industrial and aerospace/defense industries. MPG also provides foundry services for GaN and

GaAs wafer production. Major communications applications include mobile wireless infrastructure (2G, 3G and 4G), point-to-point and microwave radios, WiFi, worldwide interoperability microwave access (WiMAX), CATV wireline infrastructure and optical access for hybrid-fiber coaxial (HFC) networks. Industrial applications include Smart Energy/AMI, private mobile radio and test and measurement equipment. Aerospace and defense applications include military communications, radar and electronic warfare as well as commercial/military space communications. MPG serves a diversified, global customer base.

During fiscal 2008 and fiscal 2009, we completed three strategic acquisitions. In fiscal 2008, we acquired Sirenza Microdevices, Inc. (Sirenza) to significantly expand our product portfolio, diversify our customer base, enhance our profitability and increase our revenue growth opportunities. We also acquired Filtronic Compound Semiconductors, Limited (Filtronic) in fiscal 2008 to reduce our GaAs sourcing costs, increase our GaAs capacity (with the addition of a high-volume, state-of-the-art GaAs wafer fabrication facility, which we also refer to as a fab), reduce our capital expenditures, and expand our product portfolio of multi-market products. In fiscal 2009, we completed the acquisition of Universal Microwave Corporation (UMC). UMC designs and manufactures high-performance RF oscillators and synthesizers primarily for point-to-point radios, CATV head-end equipment and military communications radio markets. The acquisitions of Sirenza, Filtronic and UMC have furthered our strategic efforts in support of diversification and profitable growth.

In fiscal 2009, we announced a strategic restructuring that leveraged our leadership in RF components and compound semiconductor technologies. As part of the restructuring, we reduced or eliminated our investments in wireless systems, including cellular transceivers and global positioning systems (GPS) solutions. We initiated the restructuring in order to focus on our RF component and compound semiconductor opportunities, including cellular front ends and other components in CPG and our expanding portfolio of RF components in MPG. We are supporting cellular transceivers already in production, although we expect cellular transceiver sales volumes and revenues will be significantly lower in fiscal 2012 as compared to fiscal 2011.

Also in fiscal 2009, we initiated a separate restructuring to reduce manufacturing capacity and costs and operating expenses, due primarily to lower demand for our products resulting from the global economic slowdown. As part of the restructuring, we decreased our workforce, impaired certain property and equipment and reduced our fixed manufacturing and operating expenses. The restructuring activities implemented in fiscal 2009 substantially enhanced our profitability in fiscal years 2010 and 2011.

Industry Overview

Our business is diversified across multiple industries. The cellular handset industry is our largest market and is characterized by large unit volumes.

The largest segment by volume is comprised of voice phones and feature phones operating on 2G networks, and during fiscal 2011, the majority of our cellular sales were into 2G devices. In fiscal 2012, we expect our sales into smartphones to grow significantly, driven by market share gains and growth in the underlying market.

The smartphone segment is growing faster than the overall cellular handset industry. Rapidly increasing demand for internet access, email, social media, video sharing, and other mobile applications is prompting feature phone and mid-tier smartphone users to migrate increasingly to more complex, high-end smartphones. Similarly, in Asia and in other geographies, the expanding availability of broadband cellular infrastructure is prompting users of basic voice phones and feature phones to migrate increasingly to more complex mid-tier smartphones.

Smartphones, whether mid-tier or high-end, typically contain more RF content than basic or feature phones. Smartphones support 2G, 3G and increasingly 4G air interface standards, require multiple frequency bands for broad geographic coverage, and target higher performance specifications. With smartphones growing faster than the overall handset market and containing more RF content, our addressable cellular market is expected to grow faster than the overall handset market.

The RF content is also growing rapidly in notebook computers, tablets, and machine-to-machine (M2M) data devices. In notebook computers, the broad availability of high speed 3G and 4G networks is increasing the demand for cellular functionality. Similarly, the growing popularity of tablets for mobile data communication and content consumption is increasing the demand for 3G, 4G and WiFi connectivity in this segment. Finally, M2M devices are increasingly integrating cellular content for a growing number of applications, including automotive, smart grid and electricity utilities, water utilities, medical, fleet management, and point-of-sale.

Beyond handsets, RFMD serves additional growth markets that are benefiting from the increasing demand for high data rate applications. In CATV infrastructure, the rapid growth in consumer data usage, primarily through high definition television (HDTV), as well as Internet protocol television (IPTV), voice over Internet protocol (VoIP) and increases in Internet traffic, is driving market growth and placing increased emphasis on product performance, integration and power consumption. In cellular infrastructure, the expanding data traffic loads on networks are increasing the requirements for more, and faster, wireless backhaul systems (such as remote radio heads), that connect cellular base stations to switching centers. Also in cellular infrastructure, efforts to reduce energy consumption and lower carriers’ operating budgets are placing greater value on higher efficiency RF power amplifiers. There is also strong growth in Smart Energy/AMI systems, which are increasingly implemented using the Zigbee™ standard or other technologies requiring integrated RF components.

Across our customers’ diversified industries, their end-market products continue to increase in complexity and RF content. This is expanding our addressable market and increasing our opportunities to deliver more highly integrated, higher value solutions. At the same time, we are leveraging our core capabilities, including scale manufacturing, advanced packaging capabilities and deep systems-level integration expertise, to target a greater number of applications and market opportunities.

Strategy

RFMD is leveraging our leadership in RF components and compound semiconductor technologies across multiple industries to capitalize on global macro trends related to mobility, broadband connectivity and energy conservation.

We employ a product leadership strategy and leverage core capabilities in design expertise, manufacturing scale, and process and packaging technology to meet or exceed our customers’ highly complex requirements related to amplification, switching, filtering, and other RF and non-RF functionality. In many instances, we enjoy synergies across markets and applications that enable us to leverage our scale advantage.

We are sharply focused on profitable growth and diversification, and we are developing and launching hundreds of innovative new and derivative products each year to expand our presence in existing and new markets and to diversify our revenue base.

We believe our investments in industry-leading manufacturing scale, deep systems-level expertise, and broad technology and product portfolios position us to be a leading beneficiary of the increasing RF complexity in the transmit and receive chains of wireless and wired broadband applications.

Markets

We design, develop, manufacture and market our products to both domestic and international OEMs and ODMs for the following commercial, industrial, military, aerospace and other markets in both wireless and wired communications applications.

Aerospace and Defense – A&D markets in which we compete include high power, high reliability and high frequency devices that are used primarily in radar and communications equipment.

Broadband Components – This market is comprised of several segments that relate to cable and broadband transmission and consumer electronics markets. Major products include CATV hybrid-based amplifiers, which boost voice and data signals over established cable lines.

Cellular Devices – In cellular applications, communication is established through mobile devices by making a connection with a base station via RF channels. The ability of the mobile device to maintain this connection over a long distance and for long periods of time is significantly impacted by the performance of the RF section of the device. We provide the critical products in the RF section of mobile devices, including PA modules, transmit modules, RF power management integrated circuits (ICs) and RF switches for various applications in the handset.

Wireless Infrastructure – Base stations are installed across a geographic area to create wireless telecommunications networks that enable mobile devices to communicate with one another or with wired telephones. Each base station is equipped to transmit and receive RF signals through an antenna to and from mobile devices. The base station market is typified by a requirement for highly reliable products with superior durability and performance. Point-to-point

microwave radios are also included in the base station market. In point-to-point applications, transmission and reception between two fixed points occur wirelessly. Common applications include broadcasting, backhaul (the way a cellular base station connects to the rest of the telephone network), and trunking for use in operating data links within communications carriers and IT infrastructure.

Wireless Connectivity – Wireless connectivity involves the transmission and reception of data, such as e-mail, faxes, computer files, Internet content and voice, by computers and mobile devices via RF signals rather than wireline connections. We compete in both the WiFi and WiMAX wireless connectivity markets and in the Smart Energy/AMI market. The most basic AMI systems provide a way for a utility company to measure customer usage remotely without touching or physically reading a meter. More sophisticated AMI systems have data links to major household appliances to enable measurement and control. WiFi is used primarily for short-range home or office network applications in personal computers, gaming platforms, tablets and smartphones. WiFi is also used in wireless access points, such as those used in wireless hotspots. WiMAX is a technology that is complementary to WiFi and is intended for longer-range applications, providing a fixed or mobile broadband wireless link for homes, mobile computers, phones or other broadband platforms.

Other Markets – Through our MPG, we service over 20 end-markets. In addition to the primary markets above, we supply components for automotive, optical access, wireless media, wireless consumer premise equipment, test and measurement, medical and scientific, gaming, industrial radios, security systems, satellite radio, microwave communications, interactive toys, PC modem cards, keyless entry, handheld devices used for point-of-sale and other applications. In fiscal 2010, we announced the availability of our GaN foundry services, and in fiscal 2011, we announced the expansion of our foundry services to include molecular beam epitaxy (MBE) products and services (utilizing our Greensboro facilities). In fiscal 2011, we also announced the expansion of our foundry services to include GaAs pseudomorphic high electron mobility transistor (pHEMT) technologies, which will be manufactured in our United Kingdom (U.K.) fab.

Manufacturing

We have a global supply chain that routinely ships millions of units per day. Our products have varying degrees of complexity and rely on semiconductors and other components that are manufactured in-house or outsourced. The majority of our products are multi-chip modules utilizing multiple semiconductor process technologies. We are a leading supplier of RF components and a leading manufacturer of compound semiconductors (e.g., GaAs HBT, GaAs pHEMT, GaN) for RF applications.

Our GaAs products generally incorporate a transistor layer, which is grown on the GaAs wafer using a MBE or a metal organic chemical vapor deposition (MOCVD) process. Our GaN products generally incorporate a transistor layer, which is grown on the silicon carbide (SiC) wafer using a MOCVD process. We operate an MBE facility in North Carolina, and we grow the majority of our GaAs starting material in this facility. All MOCVD-based starting material is outsourced. Also, certain unique, but low-volume GaAs technologies (which support our MPG business) are outsourced.

Once the GaAs or GaN starting material is produced or purchased, the wafers are sent to one of our fabs, where semiconductor devices are manufactured through a series of manufacturing steps. We operate a six-inch wafer fab located in Greensboro, North Carolina, for GaAs wafer production and production of three-inch GaN wafers, and we operate a six-inch wafer fab located in Newton Aycliffe, U.K. Once the semiconductor manufacturing is complete, the wafers are singulated, or separated, into individual units called die.

We also use silicon-based process technologies in our products. We outsource all silicon manufacturing to leading silicon foundries.

The next step in the manufacturing process is assembly. During assembly, the die and other necessary components are placed in a microelectronic package to provide connectivity between the die and the components. Once assembled, the products are tested for RF performance and prepared for shipment through a tape and reel process. To assemble and test our products, we primarily use internal assembly facilities in the United States (U.S.), China and Germany, and we also utilize several external suppliers.

In fiscal 2010, we consolidated our Shanghai assembly and test operations with our Beijing assembly and test facility, and achieved the expected reduction in manufacturing costs by the end of December 2009. In fiscal 2011, we increased our module assembly and test capacity in China to support increased demand.

Our quality management system is registered to ISO 9001 standards and our environmental management system is registered to ISO 14001:2004. This means that a third-party independent auditor has determined that these systems meet the requirements developed by the International Organization of Standardization, a non-governmental network of the national standards institutes of over 150 countries. The ISO 9001 standards provide models for quality assurance in design/development, production, installation and servicing. The ISO 14001:2004 standards provide a structure within which a company can develop or strengthen its quality system for managing its environmental affairs. We believe that all of our key vendors and suppliers are compliant with applicable ISO 9000 or QS 9000 series specifications, which means that their operations have in each case been determined by auditors to comply with certain internationally developed quality control standards. We qualify and monitor assembly contractors based on cost and quality.

Products and Applications

We offer a broad line of products that range from single-function components to highly integrated circuits and multi-chip modules (MCMs). Our ICs include gain blocks, low noise amplifiers (LNAs), PAs, receivers, transmitters, transceivers, modulators, demodulators, attenuators, switches, frequency synthesizers and voltage-controlled oscillators (VCOs). Our MCM products include PA modules, switch-filter modules, active antenna products, VCOs, phase-locked loops (PLLs), coaxial resonator oscillators (CROs), active mixers, variable gain amplifiers, hybrid amplifiers, power doublers and optical receivers. Our passive components include splitters, couplers, mixers and transformers, as well as isolators and circulators, which are used primarily in wireless infrastructure and CATV set-top box applications. Our products employ a broad array of semiconductor process technologies, including GaAs, GaN, silicon complementary metal oxide semiconductor (CMOS) and silicon germanium (SiGe).

Raw Materials

We purchase numerous raw materials and parts, such as passive components and substrates, from external suppliers. We currently use independent foundries to supply all of our silicon-based requirements. The use of external suppliers involves a number of risks, including the possibility of material disruptions in the supply of key components and the lack of control over delivery schedules, manufacturing yields, quality and fabrication costs. In order to minimize our risk associated with external suppliers, we routinely qualify multiple sources of supply and closely monitor suppliers’ key performance indicators.

Customers

Sales to our largest customer, Nokia, represented approximately 39% of our total revenue in fiscal 2011 as compared to 55% of our total revenue in fiscal 2010. We have continued to expand our customer base and have reduced our dependence on any one customer. MPG sales grew approximately 30% in fiscal 2011 as compared to fiscal 2010, and CPG sales (excluding our largest customer) grew by approximately 50% during the same period. We expect to continue to focus on customer diversification in fiscal 2012. We expect Nokia to continue to decline as a percent of total annual revenue, driven by market share gains at cellular customers throughout the world, and growth in MPG.

Information about revenue, operating profit or loss and total assets is presented in Part II, Item 8, “Financial Statements and Supplementary Data” of this Annual Report on Form 10-K.

Sales and Marketing

We sell our products worldwide directly to customers as well as through a network of domestic and foreign sales representative firms and distributors. We select our domestic and foreign sales representatives based on technical skills and sales experience, as well as the presence of complementary product lines and the customer base served. We provide ongoing training to our representatives and distributors to keep them informed of and educated about our products. We maintain an internal sales and marketing organization that is responsible for key account management, application engineering support to customers, developing sales and advertising literature, and preparing technical presentations for industry conferences. We have sales and customer support centers located throughout the world.

Our applications engineers interact with customers during all stages of design and production, provide customers with product application notes and engineering data, maintain regular contact with customer engineers and assist in the resolution of technical problems. We believe that maintaining a close relationship with customers and channel

partners and providing them with strong technical support enhances their level of satisfaction and enables us to anticipate their future product needs.

Research and Development

Our research and development activities provide us with the necessary technologies and products to maintain leadership in the wireless communications market and to leverage and extend our capabilities into other markets. We conduct research and development activities focused on enabling longer-term, leading-edge products for our core markets as well as activities associated with developing new technologies for emerging high growth markets.

To extend our leadership position in compound semiconductor technologies, we have developed several generations of GaAs HBT and pHEMT process technologies for cellular and multi-market applications that we can manufacture in our North Carolina and U.K. fabrication facilities. During fiscal 2011, we made significant progress in the development of a high-performance power pHEMT technology that is expected to enable state-of-the-art efficiencies for our future cellular power amplifiers. We also continued to develop a next-generation backend technology that will be applied to both HBT and pHEMT processes to increase integration, reduce die size and improve performance.

We continue to develop and release new GaN-based products and invest in new GaN process technologies to exploit GaN’s performance advantages across existing and new product categories. The inherent wide band gap, high electron mobility, and high breakdown voltage characteristics of GaN semiconductor devices offer significant performance advantages versus competing technologies. Last year we qualified and production released our second GaN semiconductor process, which has optimized linearity performance. Current RF/microwave GaN process technology development is focused on a third generation technology that optimizes gain and efficiency and incorporates our latest process improvements for improved repeatability and yield. We are also developing other advanced GaN process technologies that target other applications where we anticipate GaN devices will provide a disruptive performance advantage and deliver meaningful energy savings in end-market products.

We continue to develop and qualify technologies made available to us from key suppliers where we can leverage our proprietary design methods, intellectual property (IP), and unique expertise to improve performance, reduce size or reduce the cost of our products. During fiscal 2011, we increasingly used silicon-on-insulator (SOI) technology in our expanding portfolio of RF power switch products. Additionally, we released several innovative SOI-based RF attenuators that provide a substantial reduction in complexity and improved performance when compared to conventional, discrete product approaches.

In the area of packaging technologies, we are developing and qualifying copper-based packaging technologies that allow us to improve performance and reduce or replace gold in our products. We also developed, qualified and began production of our first products using wafer level chip scale packaging (WLCSP) technology. WLCSP technology eliminates wire bonds, reduces the size and component height, and represents a lower cost packaging alternative for many of our products.

During fiscal 2011, we made progress in our concentrated photovoltaic (CPV) solar cell development program. Working with the U.S. Department of Energy’s National Renewable Energy Laboratory (NREL), we demonstrated world-class performance for dual-junction solar cells manufactured in our high volume six-inch GaAs wafer production facility. We have leveraged our extensive knowledge in high volume test and semiconductor device reliability testing to develop CPV device characterization and reliability test capabilities that are unique within the PV industry. We believe that our high-volume semiconductor production facilities and manufacturing experience will enable low-cost production of high efficiency CPV cells to meet the expanding global needs for clean renewable energy.

In fiscal years 2011, 2010, and 2009, we incurred approximately $141.1 million, $139.0 million and $170.8 million, respectively, in research and development expenses. Primarily as a result of our strategic decision to reduce or eliminate our investment in wireless systems during fiscal 2009, research and development headcount and spending dollars decreased in fiscal 2010. We are continuing to invest in new RF component products and new process technologies in support of our growth and diversification goals.

Competition

We operate in a very competitive industry characterized by rapid advances in technology and new product introductions. Our competitiveness depends on our ability to improve our products and processes faster than our

competitors, anticipate changing customer requirements and successfully develop and launch new products while reducing our costs. Our competitiveness is also affected by the quality of our customer service and technical support and our ability to design customized products that address each customer’s particular requirements within the customer’s cost limitations. Many of our current and potential competitors have entrenched market positions and customer relationships, established patents, copyrights and other intellectual property rights and substantial technological capabilities. In some cases, our competitors are also our customers or suppliers. Additionally, many of our competitors may have significantly greater financial, technical, manufacturing and marketing resources than we do, which may allow them to implement new technologies and develop new products more quickly than we can.

Intellectual Property

We value intellectual property and actively seek opportunities to further protect and advance our business interests by developing and using our proprietary IP. Such IP includes patents, copyrights, trademarks and trade secrets. We have also implemented processes and policies designed to encourage IP development, while mitigating any IP misappropriation risks.

Patent applications are filed within the U.S. and in other countries where we have a market presence. On occasion, some applications do not mature into patents for various reasons, including, but not limited to, rejections based on prior art. We also continue to acquire patents through acquisitions or direct prosecution efforts. We believe the scope of our patents is sufficient to protect our business, and our business is not dependent on a single patent or application.

Our business, including a significant percentage of our patents, is focused on RF communication devices, components, sub-components, systems, software and processes. The duration of our most relevant patents is sufficient to support our business, especially in view of the limited market life of many of our products. As we improve upon existing products and invent new ones, patents are acquired to further enhance our return on investment in products that utilize these inventions.

In our continuing endeavor to create strong brands for our products and services, we federally register trademarks, service marks and trade names that distinguish our products and services in the market. We diligently monitor these marks for their proper and intended use.

We also protect our interest in proprietary information, including business strategies, unpatented inventions, formulae, processes, and other business information that provide a competitive advantage. Such information is closely monitored and made available only to those employees whose responsibilities require access to the information.

Seasonality

Sales of our products are often subject to seasonal fluctuations. This primarily reflects the seasonal demand fluctuations for the end-products, such as mobile handsets, that incorporate our components. If anticipated sales or shipments do not occur when expected, expenses and inventory levels in that quarter can be disproportionately high, and our results of operations for that quarter, and potentially for future quarters, may be adversely affected.

Backlog

Due to industry practice and our experience, we do not believe that backlog as of any particular date is indicative of future results. Our sales are the result of consumption of standard and custom products from RFMD-owned finished goods inventory at certain customers’ “hub” locations and from purchase orders for delivery of standard and custom products. The quantities projected for consumption of hub inventory and quantities on purchase orders, as well as the shipment schedules, are frequently revised within agreed-upon lead times to reflect changes in the specific customer’s needs. As industry practice allows customers to cancel orders with limited advance notice prior to shipment, and with little or no penalty, we believe that backlog as of any particular date may not be a reliable indicator of our future revenue levels.

Employees

On April 2, 2011, we had 3,726 employees. We believe that our future prospects will depend, in part, on our ability to continue to attract and retain skilled technical, marketing and management personnel. Competition for such personnel is intense, and the number of persons with relevant experience, particularly in RF engineering, product design and technical marketing, is limited. None of our U.S. employees are represented by a labor union. A number

of our European-based employees (less than 5% of our global workforce as of April 2, 2011) are subject to collective bargaining-type arrangements, and we have never experienced any work stoppage. We believe that our current employee relations are good.

Geographic Financial Summary

A summary of our operations by geographic area is as follows (in thousands):

		Fiscal Year
		2011				2010				2009
Sales:
United States		$	156,746			$	151,673			$	159,885
International			895,010				826,720				726,621
Long-lived tangible assets:
United States		$	148,745			$	178,012			$	224,461
International			60,733				69,073				90,666

Sales for geographic disclosure purposes are based on the “bill to” address of the customer. The “bill to” address is not always an accurate representation of the location of final consumption of our products. Of our total international revenue for fiscal 2011, approximately 40% ($418.2 million) was attributable to customers in China, 14% ($144.9 million) was attributable to customers in Taiwan, 14% ($143.4 million) was attributable to customers in India, and 7% ($69.3 million) was attributable to customers in Korea.

Long-lived tangible assets primarily include property and equipment. At April 2, 2011, approximately $55.2 million (or 26%) of our total property and equipment was located in China.

For the risks associated with these foreign operations, see our risk factor entitled “We are subject to risks from international sales and operations” contained below in Item 1A, “Risk Factors.”

Environmental Matters

By virtue of operating our MBE and wafer fabrication facilities, we are subject to a variety of extensive and changing federal, state and local governmental laws, regulations and ordinances related to the use, storage, discharge and disposal of toxic, volatile or otherwise hazardous chemicals used in the manufacturing process. Any failure to comply with such requirements currently in effect or subsequently adopted could result in the imposition of fines upon us, the suspension of production or a cessation of operations, the occurrence of which could have an adverse impact upon our capital expenditures, earnings and competitive position. In addition, such requirements could restrict our ability to expand our facilities or require us to acquire costly equipment or incur other significant expenses to comply with environmental regulations. We believe that costs arising from existing environmental laws will not have a material adverse effect on our financial position or results of operations. We are an ISO 14001:2004 certified manufacturer with a comprehensive Environmental Management System (EMS) in place in order to help ensure control of the environmental aspects of the manufacturing process. Our EMS mandates compliance and establishes appropriate checks and balances to minimize the potential for non-compliance with environmental laws and regulations.

We actively monitor the hazardous materials that are used in the manufacture, assembly and testing of our products, particularly materials that are retained in the final product. We have developed specific restrictions on the content of certain hazardous materials in our products, as well as those of our suppliers and outsourced manufacturers and subcontractors. This helps to ensure that our products are compliant with the requirements of the markets into which the products will be sold.

There can be no assurance that the environmental laws will not become more stringent in the future or that we will not incur significant costs in the future in order to comply with these laws. We do not currently anticipate any material capital expenditures for environmental control facilities for the remainder of fiscal 2012 or fiscal 2013.

Access to Public Information

We make available, free of charge through our website (http://www.rfmd.com), our annual and quarterly reports on Forms 10-K and 10-Q (including related filings in XBRL format) and current reports on Form 8-K and amendments to these reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 as soon as reasonably practicable after we electronically file these reports with, or furnish them to, the Securities and Exchange Commission (SEC). The public may also request a copy of our forms filed with the SEC, without charge upon written request, directed to:

Investor Relations Department
RF Micro Devices, Inc.
7628 Thorndike Road
Greensboro, NC 27409-9421

The information contained on, or that can be accessed through, our website is not incorporated by reference into this Annual Report on Form 10-K. We have included our website address as a factual reference and do not intend it as an active link to our website.

In addition, the SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at http://www.sec.gov. You may also read and copy any documents that we file with the SEC at the SEC’s Public Reference Room located at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for information on the operation of the Public Reference Room.

ITEM 1A. RISK FACTORS.

Our operating results fluctuate.

Our revenue, earnings, margins and other operating results have fluctuated significantly in the past and may fluctuate significantly in the future. If demand for our products fluctuates as a result of economic conditions or for other reasons, our revenue and profitability could be impacted. Our future operating results will depend on many factors, including, but not limited to, the following:

	•		changes in business and economic conditions, including downturns in the semiconductor industry and the overall economy;
	•		changes in consumer confidence caused by changes in market conditions, including changes in the credit markets, expectations for inflation, unemployment levels, and energy or other commodity prices;
	•		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;
	•		the ability of third party foundries, assembly, test and tape and reel partners to handle our products in a timely and cost-effective manner that meets our customers’ requirements;
	•		our customers’ and distributors’ ability to manage the inventory that they hold and to 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 downward pressure on the average selling prices of our products caused by our customers or our competitors; and
	•		our ability to utilize our capacity efficiently or acquire additional capacity in response to customer demand.

It is likely that our future operating results could be adversely affected by one or more of the factors set forth above or other similar factors. If our future operating results are below the expectations of stock market analysts or our investors, our stock price may decline.

Our operating results may be adversely impacted by the inability of certain of our customers to access their traditional sources of credit to finance the purchase of products from us, which could lead them to reduce their level of purchases or seek credit or other accommodations from us.

The inability of our customers to access capital efficiently could cause disruptions in their businesses, thereby negatively impacting ours. For example, if our customers or channel partners do not have sufficient liquidity, they could reduce or limit new purchases, which could result in lower demand for our products or place us at risk for any trade credit we have extended to them if they are unable to repay us. This risk may increase if a general economic downturn materially impacts our customers and they are not able to manage their business risks adequately or do not properly disclose their financial condition to us.

Our industry’s technology changes rapidly.

We design and manufacture high-performance semiconductor components for wireless applications. Our markets are characterized by the frequent introduction of new products and services in response to evolving product and process technologies and consumer demand for greater functionality, lower costs, smaller products and better performance. As a result, we have experienced and will continue to experience some product design obsolescence. We expect our customers’ demands for improvements in product performance to continue, which means that we must continue to improve our product designs and develop new products that may use new technologies. It is possible that competing technologies will emerge that permit the manufacture of ICs that are superior to the products we make under existing processes. If that happens and we cannot design products using that technology or develop competitive products, our operating results will be adversely affected.

We depend on a few large customers for a substantial portion of our revenue.

A substantial portion of our revenue comes from large purchases by a small number of customers. Our future operating results depend on both the success of our largest customers and on our success in diversifying our products and customer base. We are focusing on a diversification strategy that includes growing our market share outside of our largest cellular handset customer. During fiscal 2011, we expanded our customer base as our largest customer, Nokia, represented approximately 39% of our total revenue in fiscal 2011 as compared to 55% of our total revenue in fiscal 2010.

We typically manufacture custom products on an exclusive basis for individual customers for a negotiated period of time. The concentration of our revenue with a relatively small number of customers makes us particularly dependent on factors affecting those customers. For example, if demand for their products decreases, they may stop purchasing our products and our operating results would suffer. Most of our customers can cease incorporating our products into their products with little notice to us and with little or no penalty. The loss of a large customer and failure to add new customers to replace lost revenue would have a material adverse effect on our business, financial condition and results of operations.

We operate in a very competitive industry and must continue to implement innovative technologies.

We compete with several companies primarily engaged in the business of designing, manufacturing and selling RF components, as well as suppliers of discrete products such as transistors, capacitors and resistors. Several of our competitors either have GaAs HBT process technology or are developing GaAs HBT or new fabrication processes. Foundry services are readily available for GaAs HBT processes, which may enable new competitors without their own fabrication facilities. Customers could develop products that compete with or replace our products. A decision by any of our large customers to design and manufacture ICs internally could have an adverse effect on our operating results. Increased competition could mean lower prices for our products, reduced demand for our products and a corresponding reduction in our ability to recover development, engineering and manufacturing costs.

Many of our existing and potential competitors have entrenched market positions, historical affiliations with OEMs, considerable internal manufacturing capacity, established IP rights and substantial technological capabilities. Many of our existing and potential competitors may have greater financial, technical, manufacturing or marketing resources than we do. We cannot be sure that we will be able to compete successfully with our competitors.

Our operating results are substantially dependent on development of new products.

Our future success will depend on our ability to develop new product solutions for existing and new markets. We must introduce new products in a timely and cost-effective manner and secure production orders from our customers. The development of new products is a highly complex process, and we have experienced delays in completing the development and introduction of new products at times in the past. Our successful product development depends on a number of factors, including the following:

	•		the accuracy of our prediction of market requirements and evolving standards;
	•		our ability to design products that meet our customers’ cost, size and performance requirements;
	•		acceptance of our new product designs;
	•		the availability of qualified product designers;
	•		our timely completion and execution of product designs and ramp of new products according to our customers’ needs with acceptable manufacturing yields;
	•		acceptance of our customers’ products by the market and the variability of the life cycle of such products; and
	•		our ability to successfully design, develop, manufacture and integrate new components.

We may not be able to design and introduce new products in a timely or cost-efficient manner, and our new products may fail to meet the requirements of the market or our customers. In that case, we likely will not reach the expected level of production orders, which could adversely affect our operating results. Even when a design win is achieved,

our success is not assured. Design wins may require significant expenditures by us and typically precede volume revenue by six to nine months or more. The actual value of a design win to us will ultimately depend on the commercial success of our customer’s product.

Decisions about the scope of operations of our business could affect our results of operations and financial condition.

Changes in the business environment could lead to changes in our decisions about the scope of operations of our business, and these changes could result in restructuring and asset impairment charges. Factors that could cause actual results to differ materially from our expectations with regard to changing the scope of our operations include:

	•		timing and execution of plans and programs that may be subject to local labor law requirements, including consultation with appropriate work councils;
	•		changes in assumptions related to severance and post-retirement costs;
	•		future divestitures;
	•		new business initiatives and changes in product roadmap, development and manufacturing;
	•		changes in employment levels and turnover rates;
	•		changes in product demand and the business environment; and
	•		changes in the fair value of certain long-lived assets.

We face risks associated with the operation of our manufacturing facilities.

We operate an MBE facility and a wafer fabrication facility in Greensboro, North Carolina, as well as a wafer fabrication facility in Newton Aycliffe, U.K. We currently use several international and domestic assembly suppliers, as well as internal assembly facilities in China, the U.S. and Germany to assemble and test our products. We currently have our own test and tape and reel facilities located in Greensboro, North Carolina, and China, and we also utilize contract suppliers and partners in Asia to test our products.

A number of factors will affect the future success of our facilities, including the following:

	•		demand for our products;
	•		our ability to adjust production capacity in a timely fashion in response to changes in demand for our products;
	•		our ability to generate revenue in amounts that cover the significant fixed costs of operating the facilities;
	•		our ability to qualify our facilities for new products in a timely manner;
	•		the availability of raw materials and the impact of the volatility of commodity pricing on raw materials, including GaAs substrates, gold and high purity source materials such as gallium, aluminum, arsenic, indium, silicon, phosphorous and beryllium;
	•		our manufacturing cycle times;
	•		our manufacturing yields;
	•		the political and economic risks associated with the increased reliance on our manufacturing operations in China, U.K. and Germany;
	•		our heavy reliance on our internal facilities;

	•		our heavy reliance on our wafer fabrication facilities located in the same geographic area;
	•		our ability to hire, train and manage qualified production personnel;
	•		our compliance with applicable environmental and other laws and regulations;
	•		our ability to avoid prolonged periods of down-time in our facilities for any reason; and
	•		the occurrence of natural disasters anywhere in the world, which could directly or indirectly affect our supply chain, such as the recent earthquake and tsunami in Japan.

The recent earthquake and tsunami in Japan and the aftermath have created significant economic uncertainty in that country. While we do not have manufacturing operations in Japan, we will continue to monitor the rapidly developing situation in Japan and its potential impact on our business.

If we experience poor manufacturing yields, our operating results may suffer.

Our products are very complex. Each product has a unique design and is fabricated using semiconductor process technologies that are highly complex. In many cases, the products are assembled in customized packages. Our products, many of which consist of multiple components in a single package, feature enhanced levels of integration and complexity. Our customers insist that our products be designed to meet their exact specifications for quality, performance and reliability. Our manufacturing yield is a combination of yields across the entire supply chain including wafer fabrication, assembly and test yields. Due to the complexity of our products, we periodically experience difficulties in achieving acceptable yields on certain new and existing products.

Our customers also test our components once they have been assembled into their products. The number of usable products that result from our production process can fluctuate as a result of many factors, including the following:

	•		design errors;
	•		defects in photomasks (which are used to print circuits on a wafer);
	•		minute impurities in materials used;
	•		contamination of the manufacturing environment;
	•		equipment failure or variations in the manufacturing processes;
	•		losses from broken wafers or other human error; and
	•		defects in packaging.

We constantly seek to improve our manufacturing yields. Typically, for a given level of sales, when our yields improve, our gross margins improve, and when our yields decrease, our unit costs are higher, our margins are lower, and our operating results are adversely affected.

Industry overcapacity and current macroeconomic conditions could cause us to underutilize our manufacturing facilities and have a material adverse effect on our financial performance.

It is difficult to predict future growth or decline in the demand for our products, which makes it very difficult to estimate requirements for production capacity. In recent years, we have added significant capacity through acquisitions as well as by expanding capacity at our existing wafer fabrication facilities. During the second half of fiscal 2009, we initiated a restructuring to reduce manufacturing capacity and costs and operating expenses due primarily to lower demand for our products resulting from the global economic slowdown.

In the past, capacity additions by us and our competitors sometimes exceeded demand requirements, leading to oversupply situations. Fluctuations in the growth rate of industry capacity relative to the growth rate in demand for

our products contribute to cyclicality in the semiconductor market. This is currently putting and may in the future put pressure on our average selling prices and have a material adverse effect on us.

As many of our manufacturing costs are fixed, these costs cannot be reduced in proportion to the reduced revenues experienced during periods in which we underutilize our manufacturing facilities as a result of reduced demand. If the demand for our products is not consistent with our expectations, underutilization of our manufacturing facilities may have a material adverse effect on our operating results.

In the second half of fiscal 2009, due to the decrease in orders from our customers resulting from the global economic slowdown, we reduced our manufacturing output in order to reduce our inventory levels and increase our cash flow. This action resulted in the underutilization of our manufacturing facilities, which in turn led to large unfavorable manufacturing variances and negative impacts on our margins and results of operations. In fiscal years 2011 and 2010, our demand increased and as a result, our factory utilization improved.

We are subject to increased inventory risks and costs because we build our products based on forecasts provided by customers before receiving purchase orders for the products.

In order to ensure availability of our products for some of our largest customers, we start the manufacturing of our products in advance of receiving purchase orders based on forecasts provided by these customers. However, these forecasts do not represent binding purchase commitments and we do not recognize sales for these products until they are shipped to or consumed by the customer. As a result, we incur inventory and manufacturing costs in advance of anticipated sales. Because demand for our products may not materialize, manufacturing based on forecasts subjects us to increased risks of high inventory carrying costs, increased obsolescence and increased operating costs. These inventory risks are exacerbated when our customers purchase indirectly through contract manufacturers or hold component inventory levels greater than their consumption rate because this causes us to have less visibility regarding the accumulated levels of inventory for such customers. If product demand decreases or we fail to forecast demand accurately, we could be required to write-off inventory, which would have a negative impact on our gross margin.

We depend heavily on third parties.

We purchase numerous component parts, substrates and silicon-based products from external suppliers. The use of external suppliers involves a number of risks, including the possibility of material disruptions in the supply of key components and the lack of control over delivery schedules, capacity constraints, manufacturing yields, quality and fabrication costs.

We currently use several external manufacturing suppliers to supplement our internal manufacturing capabilities. We believe all of our key vendors and suppliers are compliant with applicable ISO 9000 or QS 9000 standards. However, if these vendors’ processes vary in reliability or quality, they could negatively affect our products and, therefore, our results of operations.

We are increasingly selling certain of our products through channel partners and our inability to manage a channel partner or customer relationship may have an adverse effect on our business, financial condition and results of operations.

We are focused on developing relationships with channel and alliance partners to help us sell our products. These channel and alliance partners typically are large companies that provide system reference designs for OEMs and ODMs that include their baseband and other complementary products. Channel and alliance partners look to us and our competitors to provide RF products to their customers as part of the overall system design. In these relationships, we generally do not control the customer relationship. As a result, we are dependent upon the channel partner as the prime contractor to appropriately manage the end customer. The failure of the channel partner to do so can lead to situations where projects are delayed, modified or terminated for reasons outside our control. The channel and alliance partners may be in a different business or we may be their customer or competitor; therefore, we must balance our interest in obtaining new business with competitive and other factors. Our inability to manage these relationships could have an adverse effect on our business, financial condition and results of operations.

We are subject to risks from international sales and operations.

We operate globally with sales offices and research and development activities as well as manufacturing, assembly and testing facilities in multiple countries. As a result, we are subject to risks and factors associated with doing

business outside the U.S. Global operations involve inherent risks that include currency controls and fluctuations as well as tariff, import and other related restrictions and regulations.

Sales to customers located outside the U.S. accounted for approximately 85% of our revenue in fiscal 2011. We expect that revenue from international sales will continue to be a significant part of our total revenue. Because the majority of our foreign sales are denominated in U.S. dollars, our products become less price-competitive in countries with currencies that are low or are declining in value against the U.S. dollar. Also, we cannot be sure that our international customers will continue to accept orders denominated in U.S. dollars.

The majority of our assembly, test and tape and reel vendors are located in Asia. This subjects us to regulatory, geopolitical and other risks of conducting business outside the U.S. We do the majority of our business with our foreign assemblers in U.S. dollars. Our manufacturing costs could increase in countries with currencies that are increasing in value against the U.S. dollar. Also, we cannot be sure that our international manufacturing suppliers will continue to accept orders denominated in U.S. dollars.

In addition, if terrorist activity, armed conflict, civil or military unrest or political instability occur in the U.S. or other locations, such events may disrupt manufacturing, assembly, logistics, security and communications, and could also result in reduced demand for our products. Pandemics and similar major health concerns could also adversely affect our business and our customer order patterns. We could also be affected if labor issues disrupt our transportation or manufacturing arrangements or those of our customers or suppliers. On a worldwide basis, we regularly review our key infrastructure, systems, services and suppliers, both internally and externally, to seek to identify significant vulnerabilities as well as areas of potential business impact if a disruptive event were to occur. Once identified, we assess the risks, and as we consider it to be appropriate, we initiate actions intended to minimize the risks and their potential impact. However, there can be no assurance that we have identified all significant risks or that we can mitigate all identified risks with reasonable effort.

In order to compete, we must attract, retain, and motivate key employees, and our failure to do so could harm our results of operations.

In order to compete, we must:

	•		hire and retain qualified people with experience in RF engineering, IC design and technical marketing and support;
	•		continue to develop leaders for key business units and functions;
	•		expand our presence in international locations and adapt to cultural norms in foreign locations; and
	•		train and motivate our employee base.

Our future operating results and success may depend on keeping key technical personnel and management and expanding our sales and marketing, research and development and administrative support. We do not have employment agreements with the majority of our employees. We must also continue to attract qualified personnel. The competition for qualified personnel is intense, and the number of people with experience, particularly in RF engineering, IC design, and technical marketing and support, is limited. We cannot be sure that we will be able to attract and retain other skilled personnel in the future.

We may engage in future acquisitions that dilute our shareholders’ ownership and cause us to incur debt and assume contingent liabilities.

As part of our business strategy, we expect to continue to review potential acquisitions that could complement our current product offerings, augment our market coverage or enhance our technical capabilities, or that may otherwise offer growth or margin improvement opportunities. While we currently have no definitive agreements providing for any such acquisitions, we may acquire businesses, products or technologies in the future. In the event of such future acquisitions, we could issue equity securities that would dilute our current shareholders’ ownership, incur substantial

debt or other financial obligations or assume contingent liabilities. Such actions by us could seriously harm our results of operations or the price of our common stock. Acquisitions also entail numerous other risks that could adversely affect our business, results of operations and financial condition, including:

	•		unanticipated costs, capital expenditures or working capital requirements associated with the acquisition;
	•		acquisition-related charges and amortization of acquired technology and other intangibles that could negatively affect our reported results of operations;
	•		diversion of management’s attention from our business;
	•		injury to existing business relationships with suppliers and customers;
	•		failure to successfully integrate acquired businesses, operations, products, technologies and personnel; and
	•		unrealized expected synergies.

The price of our common stock has fluctuated widely in the past and may fluctuate widely in the future.

Our common stock, which is traded on the NASDAQ Global Select Market, has experienced and may continue to experience significant price and volume fluctuations that could adversely affect the market price of our common stock without regard to our operating performance. In addition, we believe that factors such as quarterly fluctuations in financial results, financial performance below analysts’ estimates, and activities or developments affecting our customers and other publicly traded companies in the semiconductor industry could cause the price of our common stock to fluctuate substantially. In addition, in recent periods, our common stock, the stock market in general and the market for shares of semiconductor industry-related stocks in particular have experienced extreme price fluctuations, which have often been unrelated to the operating performance of the affected companies. Any similar fluctuations in the future could adversely affect the market price of our common stock. If our stock price declines in the future, it may be more difficult to raise capital, or we may be unable to do so at all, which could have a material adverse impact on our business and results of operations.

We rely on our intellectual property portfolio and may face claims of infringement.

Our success depends in part on our ability to obtain patents, trademarks and copyrights, maintain trade secret protection and operate our business without infringing on the proprietary rights of other parties. Because of the volume of creative works rendered throughout our offices, some of these works may not receive the benefit of federal registration. In addition, the wireless and semiconductor industries are subject to frequent litigation, often regarding patent and other intellectual property rights. Leading companies and organizations in these industries have numerous patents that protect their intellectual property rights in these areas. Intellectual property rights litigation can be expensive to defend and in the event of an adverse result, we could be required to expend significant resources to pay damages for infringement, to develop non-infringing technology or to obtain licenses to the technology covered by the litigation. We cannot be sure that we would be successful in such development or that any such license would be available on commercially reasonable terms, if at all.

In addition to patent and copyright protection, we also rely on trade secrets, technical know-how and other unpatented proprietary information relating to our product development and manufacturing activities. We try to protect this information by entering into confidentiality agreements with our employees and other parties. We cannot be sure that these agreements will not be breached, that we would have adequate remedies for any breach or that our trade secrets and proprietary know-how will become known or independently discovered by others.

We may be subject to other lawsuits and claims relating to our products.

We cannot be sure that third parties will not assert product liability or other claims against us, our customers or our licensors with respect to existing and future products. Any litigation could result in significant expense and liability to us and divert the efforts of our technical and management personnel, whether or not the litigation is determined in our favor or covered by insurance.

We are subject to stringent environmental regulations.

We are subject to a variety of federal, state and local requirements governing the protection of the environment. These environmental regulations include those related to the use, storage, handling, discharge and disposal of toxic or otherwise hazardous materials used in our manufacturing processes. A change in environmental laws or our failure to comply with environmental laws could subject us to substantial liability or force us to significantly change our manufacturing operations. In addition, under some of these laws and regulations, we could be held financially responsible for remedial measures if our properties are contaminated, even if we did not cause the contamination. In addition, growing concerns about climate change, including the impact of global warming, may result in new regulations with respect to greenhouse gas emissions. Our compliance with this legislation may result in additional costs.

Provisions in our governing documents could discourage takeovers and prevent shareholders from realizing an investment premium.

Certain provisions of our articles of incorporation and bylaws could have the effect of making it more difficult for a third party to acquire, or discouraging a third party from attempting to acquire, control of RFMD. These provisions include the ability of our Board of Directors to designate the rights and preferences of preferred stock and issue such shares without shareholder approval and the requirement of supermajority shareholder approval of certain transactions with parties affiliated with RFMD. Such provisions could limit the price that certain investors might be willing to pay in the future for shares of our common stock.

On August 10, 2001, our Board of Directors adopted a shareholder rights plan, pursuant to which uncertificated stock purchase rights were distributed to our shareholders at a rate of one stock purchase right for each share of common stock held of record as of August 30, 2001. The rights plan is designed to enhance the Board’s ability to prevent an acquirer from depriving shareholders of the long-term value of their investment and to protect shareholders against attempts to acquire us by means of unfair or abusive takeover tactics. The rights become exercisable based upon certain limited conditions related to acquisitions of stock, tender offers and certain business combination transactions involving us. The existence of the rights plan may impede a takeover of us not supported by the Board, including a takeover that may be desired by a majority of our shareholders or involving a premium over the prevailing stock price.

Our operating results could vary as a result of the methods, estimates and judgments we use in applying our accounting policies.

The methods, estimates and judgments we use in applying our accounting policies have a significant impact on our results of operations (see “Critical Accounting Policies and Estimates” in Part II, Item 7 of this Form 10-K). Such methods, estimates and judgments are, by their nature, subject to substantial risks, uncertainties and assumptions, and factors may arise over time that lead us to change our methods, estimates and judgments that could significantly affect our results of operations.

Our convertible subordinated debt may have a dilutive effect on our existing shareholders and may have other adverse effects on our results of operations.

On April 4, 2007, we issued $200.0 million aggregate principal amount of 0.75% Convertible Subordinated Notes due 2012 (the “2012 Notes”) and $175.0 million aggregate principal amount of 1.00% Convertible Subordinated Notes due 2014 (the “2014 Notes” and, together with the 2012 Notes, the “Notes”) in a private placement to Merrill Lynch, Pierce, Fenner & Smith Incorporated for resale to qualified institutional buyers. The Notes are convertible into shares of our common stock under certain circumstances. Upon conversion, in lieu of shares of our common stock, for each $1,000 principal amount of Notes, a holder will receive an amount in cash equal to the lesser of (i) $1,000 or (ii) the conversion value, as determined under the applicable indentures governing the Notes. If the conversion value exceeds $1,000, we also will deliver, at our election, cash or common stock or a combination of cash and common stock equivalent to the amount of the conversion value in excess of the $1,000. This election to deliver cash or common stock if the conversion value exceeds the conversion price will require us to evaluate the inclusion of shares in our dilutive earnings per share calculation (based on the treasury stock method) in the event our stock price exceeds $8.05 per share.

In fiscal years 2011 and 2010, we purchased and retired $137.8 million aggregate principal amount of our 2012 Notes. In fiscal years 2010 and 2009 we purchased and retired $40.1 million aggregate principal amount of our 2014 Notes.

In the future, we may issue additional equity, debt or convertible securities to raise capital. If we do so, the percentage ownership of RFMD held by existing shareholders would be further reduced, and existing shareholders may experience significant dilution. In addition, new investors in RFMD may demand rights, preferences or privileges that differ from, or are senior to, those of our existing shareholders. The perceived risk of dilution associated with the sale of a large number of shares could cause some of our shareholders to sell their stock, thus causing the price of our common stock to decline. Subsequent sales of our common stock in the open market could also have an adverse effect on the market price of our common stock.

The degree to which we are leveraged could have important consequences, including, but not limited to, the following:

	•		our ability to obtain additional financing in the future for working capital, capital expenditures, acquisitions, general corporate or other purposes may be limited;
	•		our shareholders’ interests could be diluted as a result of the shares of our common stock that would be issued in the event of conversion of our convertible subordinated notes;
	•		we may be more vulnerable to economic downturns, less able to withstand competitive pressures and less flexible in responding to changing business and economic conditions;
	•		a portion of our cash flow from operations will be dedicated to the payment of the principal of, and interest on, our indebtedness; and
	•		our ability to meet our debt payment obligations, particularly at maturity, depends on our ability to generate significant cash flow in the future and we cannot assure holders that our business will generate cash flow from operations, or that future borrowings will be available to us in an amount sufficient to enable us to meet our payment obligations under our debt and to fund our other liquidity needs.

Changes in our effective tax rate may impact our results of operations.

A number of factors may increase our future effective tax rates, including the following:

	•		the jurisdictions in which profits are determined to be earned and taxed;
	•		the resolution of issues arising from tax audits with various tax authorities;
	•		changes in the valuation of our net deferred tax assets;
	•		adjustments to income taxes upon finalization of various tax returns;
	•		increases in expenses not deductible for tax purposes;
	•		changes in available tax credits;
	•		changes in tax laws or the interpretation of such tax laws, and changes in generally accepted accounting principles; and
	•		a future decision to repatriate non-U.S. earnings for which we have not previously provided for U.S. taxes.

Any significant increase in our future effective tax rates could reduce net income for future periods.

ITEM 1B. UNRESOLVED STAFF COMMENTS.

None.

ITEM 2. PROPERTIES.

Our corporate headquarters is located in Greensboro, North Carolina, where we have two office buildings (leased), a six-inch wafer production facility (owned), an MBE facility (leased), and a research and development packaging facility (leased). In Greensboro, we also have a four-inch wafer production facility (leased) that is idle due to a prior restructuring; however, the offices in the facility are occupied. In addition, we have a partially upfitted manufacturing facility (leased) that is unoccupied due to our prior restructuring.

We have an assembly and test site located in Beijing, China (owned), where we assemble and test modules. In Broomfield, Colorado (leased) and Brooksville, Florida (owned), we have assembly and test sites for highly customized modules and products, including modules and products that support our aerospace and defense business.

We also have two manufacturing facilities located in Europe. We have a wafer fabrication facility in Newton Aycliffe, U.K. (owned) and we have a facility capable of supporting a variety of packaging and test technologies in Nuremberg, Germany (leased).

We also lease space for our design centers in Chandler, Arizona; Carlsbad, San Jose and Torrance, California; Broomfield, Colorado; Hiawatha, Iowa; Billerica, Massachusetts; Charlotte, North Carolina; Richardson, Texas; Shanghai, China; and Norresundby, Denmark. In addition, we lease space for sales and customer support centers in Beijing, Shanghai, and Shenzhen, China; Reading, England; Toulouse, France; Bangalore, India; Tokyo, Japan; Seoul, South Korea; and Taipei, Taiwan.

In the opinion of management, our properties have been well-maintained, are in sound operating condition and contain all equipment and facilities necessary to operate at present levels. We believe all of our facilities are suitable and adequate for our present purposes and the productive capacity in such facilities is either substantially being utilized or we expect to further utilize the facilities as demand warrants.

ITEM 3. LEGAL PROCEEDINGS.

We are involved in various legal proceedings and related actions that have arisen in the ordinary course of our business that have not been fully adjudicated. Our management does not believe that these routine matters, when ultimately concluded and determined, will have a material adverse effect on our financial condition, liquidity or results of operations.

ITEM 4. (REMOVED AND RESERVED).

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

Our common stock is traded on the NASDAQ Global Select Market under the symbol “RFMD.” The table below shows the high and low sales prices of our common stock for the periods indicated, as reported by The NASDAQ Stock Market LLC. As of May 13, 2011, there were 2,164 holders of record of our common stock.

		High				Low
Fiscal Year Ended April 2, 2011
First Quarter		$	6.05			$	3.83
Second Quarter			6.25				3.65
Third Quarter			7.99				5.89
Fourth Quarter			8.48				6.01

		High				Low
Fiscal Year Ended April 3, 2010
First Quarter		$	3.96			$	1.24
Second Quarter			5.85				3.18
Third Quarter			5.24				3.72
Fourth Quarter			5.27				3.76

We have never declared or paid cash dividends on our common stock. We currently intend to retain our earnings for use in our business and do not anticipate paying any cash dividends in the foreseeable future.

PERFORMANCE GRAPH
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
AMONG RF MICRO DEVICES, INC., THE NASDAQ COMPOSITE INDEX
AND THE NASDAQ ELECTRONIC COMPONENTS INDEX

		Fiscal Year End
		2006				2007				2008				2009				2010				2011
Total Return Index for:
RF Micro Devices, Inc.			100.00				72.02				31.56				15.84				58.03				73.87
NASDAQ Composite			100.00				106.44				101.14				67.88				107.06				125.30
NASDAQ Electronic Components			100.00				90.78				89.71				59.15				94.48				106.53

Notes:

A.		The lines represent monthly index levels derived from compounded daily returns, assuming reinvestment of all dividends.
B.		The indexes are reweighted daily, using the market capitalization on the previous trading day.
C.		If the monthly interval, based on the fiscal year-end, is not a trading day, the preceding trading day is used.
D.		The index level for all series was set to $100.00 on April 1, 2006.

Purchases of Equity Securities

										Total number of				Approximate dollar
										shares purchased as				value of shares
										part of publicly				that may yet be
		Total number of				Average price				announced plans or				purchased under the
Period		shares purchased				paid per share				programs				plans or programs
January 2, 2011 to January 29, 2011			0			$	0.00				0			$200.0 million
January 30, 2011 to February 26, 2011			1,571,647			$	7.44				1,571,647			$188.3 million
February 27, 2011 to April 2, 2011			125,000			$	7.50				125,000			$187.4 million
Total			1,696,647			$	7.44				1,696,647			$187.4 million

On January 25, 2011, we announced that our Board of Directors had 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. During the fiscal year ended April 2, 2011, we repurchased approximately 1.7 million shares at an average price of $7.44 on the open market.

ITEM 6. SELECTED FINANCIAL DATA.

The selected financial data set forth below for the fiscal years indicated were derived from our audited consolidated financial statements. The information should be read in conjunction with our consolidated financial statements (including the notes thereto) and with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” appearing elsewhere in this report.

		Fiscal Year End
		2011				2010				2009				2008				2007
		(In thousands, except per share data)
Revenue		$	1,051,756			$	978,393			$	886,506			$	956,270			$	1,023,615
Operating costs and expenses:
Cost of goods sold			662,085				623,224				669,163				681,314				666,755
Research and development			141,097				138,960				170,778				207,362				184,979
Marketing and selling			59,470				56,592				64,946				57,330				53,863
General and administrative			48,003				48,316				50,352				42,080				37,301
Other operating expense (income)			1,582				4,895				800,563	1			19,085				(33,834	)6
Total operating costs and expenses			912,237				871,987				1,755,802				1,007,171	4			909,064
Income (loss) from operations			139,519				106,406				(869,296	)			(50,901	)			114,551
Interest expense			(17,140	)			(23,997	)			(25,893	)			(24,533	)			(4,583	)
Interest income			787				1,291				5,337				29,046				9,305
Other income (expense), net			339				1,134				9,844	2			3,906				(32,874	)7
Income (loss) before income taxes			123,505				84,834				(880,008	)			(42,482	)			86,399
Income tax benefit (expense)			1,053	5			(13,815	)			(7,896	)3			39,088	5			(2,983	)
Net income (loss)		$	124,558			$	71,019			$	(887,904	)		$	(3,394	)		$	83,416
Net income (loss) per share:
Basic		$	0.46			$	0.27			$	(3.38	)		$	(0.01	)		$	0.43
Diluted		$	0.44			$	0.25			$	(3.38	)		$	(0.01	)		$	0.39
Shares used in per share calculation:
Basic			272,575				267,349				262,493				227,270				192,137
Diluted			280,394				289,429				262,493				227,270				226,513

		As of Fiscal Year End
		2011				2010				2009				2008				2007
Cash and cash equivalents			131,760				104,778				172,989				129,750				228,940
Short-term investments			159,881				134,882				93,527				100,841				89,678
Working capital			465,222				396,091				418,090				480,556				467,223
Total assets			1,025,393				1,014,008				1,088,642	1			2,011,309	4			1,089,634
Long-term debt and capital lease obligations, less current portion			177,557				289,837				505,162	2			525,082				245,709
Shareholders’ equity			676,355				530,084				431,962	1			1,296,101	4			719,667

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

This Annual Report on Form 10-K 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. Our business is subject to numerous risks and uncertainties, including those relating to variability in our operating results, the inability of certain of our customers or suppliers to access their traditional sources of credit, our industry’s rapidly changing technology, our dependence on a few large customers for a substantial portion of our revenue, our ability to implement innovative technologies, our ability to bring new products to market, the efficient and successful operation of our wafer fabrication facilities, molecular beam epitaxy facility, assembly facilities and test and tape and reel facilities, our ability to adjust production capacity in a timely fashion in response to changes in demand for our products, variability in manufacturing yields, industry overcapacity and current macroeconomic conditions, inaccurate product forecasts and corresponding inventory and manufacturing costs, dependence on third parties and our ability to manage channel partners and customer relationships, our dependence on international sales and operations, our ability to attract and retain skilled personnel and develop leaders, the possibility that future acquisitions may dilute our shareholders’ ownership and cause us to incur debt and assume contingent liabilities, fluctuations in the price of our common stock, claims of infringement on our intellectual property portfolio, lawsuits and claims relating to our products, and the impact of stringent environmental regulations. These and other risks and uncertainties, which are described in more detail under Item 1A, “Risk Factors” in this Annual Report on Form 10-K and in other reports and statements that we file with the SEC, could cause actual results and developments to be materially different from those expressed or implied by any of these forward-looking statements.

The following discussion should be read in conjunction with, and is qualified in its entirety by reference to, our audited consolidated financial statements, including the notes thereto.

OVERVIEW

Company

We are a recognized 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 (WLAN or WiFi), cable television (CATV)/broadband, Smart Energy/advanced metering infrastructure (AMI), 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 world’s leading mobile device, customer premises and communications equipment providers.

Our design and manufacturing expertise encompasses many semiconductor process technologies, which we access through both internal and external resources. We are a leading manufacturer of gallium arsenide (GaAs)-based and gallium nitride (GaN) compound semiconductors for RF applications. We access silicon-based technologies and a small percentage of GaAs through external foundries. Our broad design and manufacturing resources enable us to deliver products optimized for performance and cost in order to best meet our customers’ performance, cost and time-to-market requirements.

Business Segments

We follow Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 280, “Segment Reporting” (FASB ASC Topic 280), which establishes standards for the way public companies report information about operating segments in annual financial statements and in interim reports to shareholders. Under FASB ASC Topic 280, the method for determining what information to report is based on the way that management organizes the segments within the company for the chief operating decision maker to make operating decisions,

allocate resources and assess financial performance. Although we had two business units as of April 2, 2011 (Cellular Products Group (CPG) and Multi-Market Products Group (MPG)), we report financial information as one operating segment pursuant to the aggregation criteria set forth in FASB ASC Topic 280.

Fiscal 2011 Management Summary

Our key financial highlights for the fiscal year ended April 2, 2011, are as follows:

	•		Our revenue increased 7.5% in fiscal 2011 to $1,051.8 million as compared to $978.4 million in fiscal 2010. Sales of our cellular products increased year-over-year driven primarily by customer diversification and increased demand for new and existing products. In addition, sales of our MPG-related products increased primarily due to an increase in demand for a broad range of wireless and wired applications.
	•		Our gross profit was 37.0% of revenue in fiscal 2011 as compared to 36.3% of revenue in fiscal 2010. The improvement in gross margin reflected our improved overall manufacturing yields, improved factory utilization rates, higher sales of new products with higher gross margins, and improved pricing on externally-sourced raw materials. These improvements were offset partially by increased demand of lower margin transceivers and erosion in average selling prices.
	•		Operating income was $139.5 million in fiscal 2011 as compared to $106.4 million in fiscal 2010. Our operating income increased primarily due to an increase in revenue and an increase in gross profit.
	•		Our net income per diluted share was $0.44 for fiscal 2011 compared to a net income per diluted share of $0.25 for fiscal 2010.
	•		We generated positive cash flow from operations of $213.4 million for fiscal 2011 as compared to $185.7 million for fiscal 2010, primarily attributable to improved profitability.
	•		Capital expenditures totaled $25.7 million in fiscal 2011 as compared to $8.4 million in fiscal 2010.
	•		During fiscal 2011, we purchased and retired a total of $135.5 million aggregate principal amount of our convertible subordinated notes due 2012, which resulted in a loss of approximately $2.4 million.
	•		During fiscal 2011, we repurchased approximately 1.7 million shares of common stock for approximately $12.6 million.

RESULTS OF OPERATIONS FOR FISCAL 2011 VERSUS FISCAL 2010

The following table presents a summary of our results of operations for fiscal years 2011 and 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.

						% of								% of				Increase				Percentage
(In thousands, except percentages)		2011				Revenue				2010				Revenue				(Decrease)				Change
Revenue		$	1,051,756				100.0	%		$	978,393				100.0	%		$	73,363				7.5	%
Cost of goods sold			662,085				63.0				623,224				63.7				38,861				6.2
Research and development			141,097				13.4				138,960				14.2				2,137				1.5
Marketing and selling			59,470				5.7				56,592				5.8				2,878				5.1
General and administrative			48,003				4.5				48,316				4.9				(313	)			(0.6	)
Other operating expense			1,582				0.1				4,895				0.5				(3,313	)			(67.7	)
Operating income		$	139,519				13.3	%		$	106,406				10.9	%			33,113				31.1

REVENUE

Our revenue increased in fiscal 2011 as compared to fiscal 2010, due to an increase in sales of our cellular products driven primarily by customer diversification and increased demand for new and existing products. In addition, sales of MPG-related products increased primarily due to an increase in demand for a broad range of wireless and wired applications. Fiscal 2010 revenue benefited from an additional week versus fiscal 2011.

Sales to our largest customer were approximately 39% of our fiscal 2011 revenue compared to 55% of our fiscal 2010 revenue. Our customer diversification strategy has successfully reduced our percentage of sales to our largest customer and increased our market share elsewhere, particularly with customers throughout Asia. Our diversification strategy is primarily focused on growing our MPG revenue, expanding our content in the cellular front end and increasing our market share at key customers outside of our largest customer.

International shipments amounted to $895.0 million in fiscal 2011 (approximately 85% of revenue) compared to $826.7 million in fiscal 2010 (approximately 85% of revenue). Shipments to Asia totaled $807.2 million in fiscal 2011 (approximately 77% of revenue) compared to $699.0 million in fiscal 2010 (approximately 71% of revenue).

OPERATING INCOME

Operating income for fiscal 2011 was approximately $139.5 million compared to an operating income of $106.4 million for fiscal 2010. Our operating income increased primarily due to an increase in revenue and an increase in gross profit. Fiscal 2010 operating expenses were negatively impacted due to the additional week included in fiscal 2010 versus fiscal 2011.

RESULTS OF OPERATIONS FOR FISCAL 2010 VERSUS FISCAL 2009

The following table presents a summary of our results of operations for fiscal years 2010 and 2009:

						% of								% of				Increase				Percentage
(In thousands, except percentages)		2010				Revenue				2009				Revenue				(Decrease)				Change
Revenue		$	978,393				100.0	%		$	886,506				100.0	%		$	91,887				10.4	%
Cost of goods sold			623,224				63.7				669,163				75.5				(45,939	)			(6.9	)
Research and development			138,960				14.2				170,778				19.3				(31,818	)			(18.6	)
Marketing and selling			56,592				5.8				64,946				7.3				(8,354	)			(12.9	)
General and administrative			48,316				4.9				50,352				5.7				(2,036	)			(4.0	)
Goodwill impairment			—				—				619,551				69.9				(619,551	)			(100.0	)
Other operating expense			4,895				0.5				181,012				20.4				(176,117	)			(97.3	)
Operating income (loss)		$	106,406				10.9	%		$	(869,296	)			(98.1	)%			975,702				112.2

REVENUE

Our revenue increased in fiscal 2010 as compared to fiscal 2009, due to an increase in sales of our cellular products driven primarily by customer diversification and increased demand for our new products. In addition, fiscal 2010 was a 53-week fiscal year in contrast to fiscal 2009, which was a 52-week fiscal year. These increases to revenue were partially offset by year-over-year declines in demand for our CATV line amplifiers driven primarily by the continued impact of the global economic slowdown on this line of business during the first half of fiscal 2010.

Sales to our largest customer were approximately 55% of our fiscal 2010 revenue compared to 52% of our fiscal 2009 revenue. Although our largest customer’s percentage of sales increased year-over-year, their percentage of sales declined to approximately 50% of fiscal 2010 fourth quarter revenue. Our customer diversification strategy reduced our percentage of sales to our largest customer and increased our market share elsewhere, particularly at customers throughout Asia.

International shipments amounted to $826.7 million in fiscal 2010 (approximately 85% of revenue) compared to $726.6 million in fiscal 2009 (approximately 82% of revenue). Shipments to Asia totaled $699.0 million in fiscal 2010 (approximately 71% of revenue) compared to $554.2 million in fiscal 2009 (approximately 63% of revenue).

OPERATING INCOME (LOSS)

Operating income was approximately $106.4 million for fiscal 2010 compared to an operating loss of $869.3 million for fiscal 2009. Our operating income increased due to an increase in revenue and an increase in gross profit. Additionally, our fiscal 2010 operating expenses were lower due to the fiscal 2009 strategic restructurings (see Note 10 to the Consolidated Financial Statements).

In fiscal 2009, we recorded an impairment charge of $686.5 million to goodwill and other intangibles as a result of the deteriorating global macroeconomic conditions and we recorded restructuring expenses of approximately $114.2 million.

Cost of Goods Sold

Our cost of goods sold for fiscal 2010 decreased as a percentage of revenue primarily due to cost savings initiatives resulting from the fiscal 2009 restructuring activities, improved factory utilization rates resulting from increased demand, and improved pricing on externally-sourced raw materials. Our cost of goods sold for fiscal 2009 was negatively impacted by an increase in inventory reserves as well as the under-absorption of fixed manufacturing costs, which resulted from the lower demand for our products attributable primarily to the overall global economic slowdown.

Research and Development

The decrease in research and development expenses was primarily due to the decrease in headcount and related personnel expense associated with our strategic decision to reduce or eliminate our investment in wireless systems. This decrease was partially offset by our continued investments in RF components.

Marketing and Selling

The decrease in marketing and selling expenses was primarily due to the decrease in headcount and related personnel expense as a result of the fiscal 2009 restructuring activities. In addition, marketing and selling expense decreased as a result of lower intangible amortization expense as compared to the corresponding period of fiscal 2009, due to the impairment of certain customer relationship intangibles during fiscal 2009 (see Note 5 to the Consolidated Financial Statements).

General and Administrative

General and administrative expenses for fiscal 2010 decreased slightly when compared to fiscal 2009 primarily due to a decrease in headcount and related personnel expense and other administrative costs associated with the fiscal 2009 restructuring activities.

Other Operating Expense

During fiscal 2009, we initiated a restructuring to reduce our manufacturing capacities and costs and operating expenses, due primarily to lower demand for our products in the second half of fiscal 2009 resulting from the global economic slowdown. The restructuring decreased our workforce and impaired certain property and equipment. As a result of these restructuring activities, we recorded $2.8 million and $67.1 million of expenses in fiscal years 2010 and 2009, respectively. The accrued restructuring balance, which primarily related to lease and other contracts, was $9.7 million and $12.8 million as of April 3, 2010 and March 28, 2009, respectively. As of April 3, 2010, the restructuring associated with the adverse macroeconomic business environment was substantially complete.

In early fiscal 2009, we initiated a restructuring to reduce investments in wireless systems, including cellular transceivers and GPS solutions, in order to focus on our RF component opportunities. Additionally, we consolidated the majority of our production test facilities in an effort to reduce cycle time, better serve our customer base and improve our overall profitability. As a result of these restructuring activities, we recorded $1.0 million and $47.1 million of expenses for fiscal years 2010 and 2009, respectively. The accrued restructuring balance, which primarily related to lease and other contracts, was $1.6 million and $3.2 million as of April 3, 2010 and March 28, 2009, respectively. As of April 3, 2010, the restructuring to reduce or eliminate our investments in wireless systems was substantially complete.

At the end of fiscal 2009, we estimated annualized manufacturing costs and operating expenses would be reduced by approximately $140.0 million as a result of our restructuring activities. The annualized expense reductions were achieved as expected in fiscal 2010.

OTHER (EXPENSE) INCOME AND INCOME TAXES FOR FISCAL YEARS 2011, 2010 AND 2009

(In thousands)		2011				2010				2009
Interest expense		$	(17,140	)		$	(23,997	)		$	(25,893	)
Interest income			787				1,291				5,337
(Loss) gain on retirement of convertible subordinated notes			(2,412	)			1,540				14,382
Other income (expense)			2,751				(406	)			(4,538	)
Income tax benefit (expense)			1,053				(13,815	)			(7,896	)

Interest expense

Interest expense has decreased as a result of lower debt balances. During fiscal 2011, we purchased and retired $135.5 million aggregate principal amount of our convertible subordinated notes due 2012. In addition, the remaining $10.0 million aggregate principal amount of our 1.50% convertible subordinated notes due 2010 (the “2010 Notes”) matured and was repaid during fiscal 2011. In fiscal 2010, we purchased and retired $207.1 million aggregate principal amount of our convertible subordinated notes due 2010, 2012, and 2014, and in fiscal 2009, we purchased and retired $55.3 million aggregate principal amount of our convertible subordinated notes due 2010 and 2014.

Interest income

Interest income decreased during fiscal 2011 and fiscal 2010, primarily because of lower prevailing interest rates, which were approximately 0.3% for fiscal 2011, 0.5% for fiscal 2010 and 1.9% for fiscal 2009.

(Loss) gain on the retirement of convertible subordinated notes

During fiscal 2011, we purchased and retired $135.5 million aggregate principal amount of our convertible subordinated notes due 2012, which resulted in a loss of approximately $2.4 million. In fiscal 2010, we purchased and retired $207.1 million aggregate principal amount of our 2010, 2012 and 2014 Notes, which resulted in a net gain of approximately $1.5 million, and in fiscal 2009, we purchased and retired $55.3 million aggregate principal amount of our 2010 and 2014 Notes, which resulted in a gain of $14.4 million.

Other Income (Expense)

In fiscal 2011, we incurred a foreign currency gain of $2.1 million as compared to a loss of $0.5 million in fiscal 2010 and a loss of $3.2 million in fiscal 2009. In fiscal 2011, the $2.6 million favorable change year-over-year was driven by the mix of our balance sheet accounts denominated in the local foreign currencies as the U.S. dollar depreciated against the Renminbi, Euro, and Pound Sterling.

The decrease in other income in fiscal 2009 was primarily related to foreign currency exchange rate impact on our denominated Euro and Pound Sterling accounts as the rates weakened against the U.S. dollar.

Income taxes

Income tax benefit for fiscal 2011 was $1.1 million, which is comprised primarily of tax expense related to domestic and international operations offset by tax benefits related to the release of the remaining $22.8 million valuation allowance against U.K. deferred tax assets, other 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. For fiscal 2011, this resulted in an annual effective tax rate of (0.9%).

In comparison, the income tax expense for fiscal 2010 was $13.8 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, tax expense related to finalizing the Advance Pricing Agreement (APA) and related adjustments with China tax authorities for calendar years 2006 through 2008, tax expense related to settlement of the North Carolina audit of fiscal years 2006 through 2008, and tax benefit from the carryback of fiscal 2009 federal losses. For fiscal 2010, this resulted in an annual effective tax rate of 16.3%.

For fiscal 2009, the income tax expense was $7.9 million, which is primarily comprised of tax expense related to international operations and an increase in the valuation allowance against domestic and foreign deferred tax assets. For fiscal 2009, this resulted in an annual effective tax rate of (0.9%).

A valuation allowance has been established against the net deferred tax assets in the taxing jurisdictions where, based upon the positive and negative evidence available, it is more likely than not that the related net deferred tax assets will not be realized. Realization is dependent upon generating future income in the taxing jurisdictions in which the operating loss carryovers, credit carryovers, depreciable tax basis, and other tax deferred assets exist. We reevaluate the realizability of these deferred tax assets on a quarterly basis. As of the end of fiscal years 2011, 2010 and 2009, the valuation allowance against domestic and foreign deferred tax assets was $92.3 million, $132.1 million and $138.4 million, respectively.

The fiscal 2009 valuation allowance arose mainly from uncertainty related to the realizability of Shanghai, China deferred tax assets acquired in connection with the Sirenza acquisition, U.K. deferred tax assets acquired in connection with the Filtronic acquisition, and U.S. deferred tax assets due to operating losses and impairment charges incurred in the third quarter of fiscal 2009 that resulted in the U.S. moving into a cumulative pre-tax loss for the most recent three-year period. During fiscal 2010, the $6.3 million decrease in the overall valuation allowance was comprised of a decrease of $7.6 million related to the carryback of the fiscal 2009 federal NOL and an increase of $1.3 million related to other changes in domestic and foreign deferred tax assets during fiscal 2010. The $39.8 million decrease in the valuation allowance during fiscal 2011 was comprised of a $22.8 million release of the U.K. valuation allowance related to the remaining net deferred tax assets as of the end of fiscal 2011 and $17.0 million for other decreases related to changes in domestic and foreign net deferred tax assets during fiscal 2011.

During fiscal 2011, all of the U.K. valuation allowance was released. The positive evidence of income being generated in the U.K. in each of the last several quarters, the scheduled completion during fiscal 2012 of the implementation of production technology to allow the U.K. facility to produce power amplifiers in addition to switches, and future projections of continued profitability overcame any remaining negative evidence.

As of the end of fiscal 2011, a valuation allowance remained against the net deferred tax assets in the U.S. and Shanghai, China, as the negative evidence of cumulative pre-tax losses for the most recent three-year period in those jurisdictions were not overcome by available positive evidence. However, because of favorable operating results over the last two years, management believes a reasonable possibility exists that within the next year sufficient positive evidence may become available to reach a conclusion that a substantial portion of the remaining valuation allowance related to the U.S. deferred tax assets could be released within the next twelve months.

On April 2, 2011, we had outstanding net operating loss (NOL) carryforwards for federal domestic tax purposes of approximately $22.5 million, which will begin to expire in 2019, if unused, and state losses of approximately $99.8 million, which will begin to expire in 2011, if unused. In addition, federal credits of $43.2 million and state credits of $27.3 million may expire in years 2011-2029 and 2011-2024, respectively, if unused. Included in these amounts are certain NOLs and other tax attribute assets acquired in conjunction with our previous acquisitions. The utilization of U.S.-acquired NOLs and other deferred tax assets is subject to certain annual limitations as required under Internal Revenue Code Section 382 and similar state tax provisions. In addition, as of the end of fiscal 2011 we had approximately $32.4 million of U.K. tax losses, which were primarily acquired in connection with the Filtronic acquisition and which carry forward indefinitely. In the opinion of management, there has not been a material change in the nature or conduct of the U.K. business that would subject these U.K.-acquired tax loss carryforwards to limitation under the U.K. anti-avoidance provisions.

Our gross unrecognized tax benefits totaled $29.5 million as of March 28, 2009, $31.8 million as of April 3, 2010, and $32.9 million as of April 2, 2011. Of those gross unrecognized tax benefits, $18.9 million, $21.1 million, and $24.4 million net of federal benefit of state taxes represents the respective amount of unrecognized tax benefits that, if recognized, would impact the effective tax rate. Included in the balance of gross unrecognized tax benefits at April 2, 2011, is $0.5 million to $1.0 million related to tax positions for which it is reasonably possible that the total amounts could significantly change in the next 12 months. This amount represents a decrease in gross unrecognized tax benefits related to reductions for tax positions in prior years.

SHARE-BASED COMPENSATION

Under FASB ASC Topic 718, “Compensation — Stock Compensation” (FASB ASC Topic 718), share-based compensation cost is measured at the grant date, based on the estimated fair value of the award using an option pricing model (Black-Scholes), and is recognized as expense over the employee’s requisite service period.

As of April 2, 2011, total remaining unearned compensation cost related to nonvested restricted stock units and options was $29.7 million, which will be amortized over the weighted-average remaining service period of approximately 1.1 years.

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. Beginning in fiscal 1998, we have raised approximately $1,053.3 million, net of offering expenses, from public and Rule 144A securities offerings. As of April 2, 2011, we had working capital of approximately $465.2 million, including $131.8 million in cash and cash equivalents, compared to working capital at April 3, 2010, of $396.1 million, including $104.8 million in cash and cash equivalents.

Share Repurchase

In the fourth quarter of fiscal 2011, we announced that our Board of Directors had 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. During the fiscal year ended April 2, 2011, we repurchased 1.7 million shares at an average price of $7.44 on the open market.

Cash Flows from Operating Activities

Operating activities in fiscal 2011 provided cash of $213.4 million, compared to $185.7 million in fiscal 2010. This increase in cash flows from operations was primarily attributable to improved profitability and an improvement in the management of our value added tax (VAT) recovery process with China. This increase in cash provided by operating activities was partially offset by an increase in inventory levels in support of expected customer demand.

Cash Flows from Investing Activities

Net cash used in investing activities in fiscal 2011 was $30.2 million compared to $46.2 million in fiscal 2010. During fiscal 2011, we had net purchases of securities available-for-sale of $5.1 million compared to net purchases of securities available-for-sale of $41.1 million in fiscal 2010. Our capital expenditures totaled approximately $25.7 million during fiscal 2011 (primarily for the purchase of additional test and assembly equipment) compared to $8.4 million during fiscal 2010. Capital expenditures in fiscal 2012 are expected to be between 3% and 5% of revenue, which we expect to fund with cash flows from operations. The actual amount of capital expenditures will be dependent on our sourcing strategy for manufacturing capacity and the rate and pace of new technology development.

Cash Flows from Financing Activities

Net cash used in financing activities in fiscal 2011 was $157.3 million compared to $207.2 million in fiscal 2010. This decrease in cash used in financing activities was primarily due to decreased repayments of debt. During fiscal 2011, we purchased and retired $135.5 million aggregate principal amount of the 2012 Notes for $134.6 million, we repaid the $12.9 million balance of a “no net cost” loan (see Note 7 to the Consolidated Financial Statements) and we paid the remaining $10.0 million balance of our 2010 Notes when they matured on July 1, 2011. During fiscal 2010, we purchased and retired $207.1 million aggregate principal amount of our convertible subordinated notes due 2010, 2012 and 2014 for approximately $203.6 million. In addition, cash flows from financing activities increased approximately $18.3 million in fiscal 2011 as compared to fiscal 2010, related to proceeds from the exercise of stock options and employee stock purchases. These decreases in cash used in financing activities were partially offset by the repurchase of 1.7 million shares of our common stock for $12.6 million in fiscal 2011.

During the first quarter of fiscal 2012, the remaining balance of our asset-based equipment term loan (consisting of a balloon payment of $3.0 million, plus $0.9 million of principal and interest payments) is due and is expected to be paid with cash on hand.

Our future capital requirements may differ materially from those currently anticipated and will depend on many factors, including, but not limited to, market acceptance of our products, 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, coupled with our existing cash and cash equivalents, we believe that we have sufficient liquidity to meet both our short-term and long-term cash requirements. However, if there is a significant decrease in 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.

IMPACT OF INFLATION

We do not believe that the effects of inflation had a significant impact on our revenue or income from continuing operations during fiscal years 2011, 2010 and 2009. Our financial results could be adversely affected by wage and commodity price inflation (including precious metals) in fiscal 2012.

OFF-BALANCE SHEET ARRANGEMENTS

As of April 2, 2011, we had no off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of SEC Regulation S-K.

CONTRACTUAL OBLIGATIONS

The following table summarizes our significant contractual obligations and commitments (in thousands) as of April 2, 2011, and the effect such obligations are expected to have on our liquidity and cash flows in future periods.

		Payments Due By Period
		Total				Less than												More than
		Payments				1 year				1-3 years				3-5 years				5 years
Capital commitments		$	11,570			$	11,570			$	—			$	—			$	—
Capital leases			309				73				146				90				—
Operating leases			36,511				9,570				14,134				7,057				5,750
Convertible debt (including interest) *			202,571				1,816				65,179				135,576				—
Other debt (including interest)			11,410				4,352				7,058				—				—
Purchase obligations			57,520				54,891				2,591				38				—
Total		$	319,891			$	82,272			$	89,108			$	142,761			$	5,750

Capital Commitments

On April 2, 2011, we had short-term capital commitments of approximately $11.6 million, primarily for increasing manufacturing capacity, as well as for equipment replacements, equipment for process improvements and general corporate requirements.

Capital Leases

We lease certain equipment and computer hardware and software under non-cancelable lease agreements that are accounted for as capital leases. Interest rates on capital leases ranged from 6.0% to 6.4% as of April 2, 2011. Equipment under capital lease arrangements is included in property and equipment and has a cost of less than $0.5 million as of April 2, 2011 and April 3, 2010.

Operating Leases

We lease the majority of our corporate, wafer fabrication and other facilities from several third party real estate developers. The remaining terms of these operating leases range from approximately 1 year to 12 years. Several have renewal options of up to two 10-year periods and several also include standard inflation escalation terms. Several also include rent escalation, rent holidays and leasehold improvement incentives, which are recognized to expense on a straight-line basis. The amortization period of leasehold improvements made either at the inception of the lease or during the lease term is amortized over the lesser of the remaining life of the lease term or the useful life of the asset. We also lease various machinery and equipment and office equipment under non-cancelable operating leases. The remaining terms of these operating leases range from less than one year to approximately three years. As of April 2, 2011, the total future minimum lease payments were approximately $36.1 million related to facility operating leases and approximately $0.4 million related to equipment operating leases.

Convertible Debt

In April 2007, we issued $200 million aggregate principal amount of 0.75% Convertible Subordinated Notes due on April 15, 2012 (the “2012 Notes”) and $175 million aggregate principal amount of 1.00% Convertible Subordinated Notes due on April 15, 2014 (the “2014 Notes,” and together with the 2012 Notes, the “Notes”) in a private placement to Merrill Lynch, Pierce, Fenner & Smith Incorporated for resale to qualified institutional buyers. The net proceeds of the offering were approximately $366.2 million after payment of the underwriting discount and expenses of the offering totaling approximately $8.8 million. Interest on the Notes is payable in cash semiannually in arrears on April 15 and October 15 of each year, beginning October 15, 2007. The Notes are subordinated unsecured obligations and rank junior in right of payment to all of our existing and future senior debt. The Notes effectively will be subordinated to the indebtedness and other liabilities of our subsidiaries.

Holders may convert their Notes based on a conversion rate of 124.2969 shares of our common stock per $1,000 principal amount of Notes (which is equal to an initial conversion price of approximately $8.05 per share), subject to adjustment, only under the following circumstances: (i) if the closing price of our common stock reaches, or the trading price of the Notes falls below, specified thresholds for a specified number of trading days, (ii) if specified distributions to holders of our common stock occur, (iii) if a fundamental change occurs or (iv) during the last month prior to maturity of the applicable Notes. Upon conversion, in lieu of shares of our common stock, for each $1,000 principal amount of Notes, a holder will receive an amount in cash equal to the lesser of (i) $1,000 or (ii) the conversion value, as determined under the applicable indentures governing the Notes. If the conversion value exceeds $1,000, we also will deliver, at our election, cash or common stock or a combination of cash and common stock equivalent to the amount of the conversion value in excess of $1,000. This election to deliver cash or common stock if the conversion value exceeds the conversion price will require us to evaluate the inclusion of shares in our dilutive earnings per share calculation (based on the treasury stock method) in the event our stock price exceeds $8.05 per share.

Holders of the Notes who convert their Notes in connection with a fundamental change, as defined in the Indentures, may be entitled to a make whole premium in the form of an increase in the conversion rate applicable to their Notes. In addition, in the event of a fundamental change, holders of the Notes may require us to purchase for cash all or a portion of their Notes, subject to specified exceptions, at a price equal to 100% of the principal amount of the Notes plus accrued and unpaid interest, if any, up to, but not including, the fundamental change purchase date.

During fiscal 2011, we purchased and retired $135.5 million aggregate principal amount of our 2012 Notes for an average price of $99.32, which resulted in a loss of approximately $2.4 million. During fiscal 2010, we purchased and retired $2.3 million aggregate principal amount of the 2012 Notes at an average price of $78.56, which resulted in a gain of approximately $0.3 million. During the first quarter of fiscal 2012, the balance of our 2012 Notes will be reclassified from “long-term debt” to “current portion of long-term debt” on our consolidated balance sheet.

In fiscal 2010, we purchased and retired $7.8 million aggregate principal amount of the 2014 Notes at an average price of $61.55, which resulted in a gain of approximately $1.6 million. In fiscal 2009, we purchased and retired

$32.3 million aggregate principal amount of our 2014 Notes at an average price of $41.47, which resulted in a gain of approximately $10.6 million.

The 2012 Notes had a fair value on the Private Offerings, Resale and Trading through Automated Linkages (PORTAL) Market of $66.1 million as of April 2, 2011 (excluding $137.8 million of the aggregate principal amount of the 2012 Notes that were purchased and retired as of April 2, 2011) and $191.5 million as of April 3, 2010 (excluding $2.3 million of the aggregate principal amount of the 2012 Notes that were purchased and retired as of April 3, 2010). The 2014 Notes had a fair value on the PORTAL Market of $145.0 million as of April 2, 2011 (excluding $40.1 million of the aggregate principal amount of the 2014 Notes that were purchased and retired as of April 2, 2011) and $122.8 million as of April 3, 2010 (excluding $40.1 million of the aggregate principal amount of the 2014 Notes that were purchased and retired as of April 3, 2010).

The indentures governing our 2012 Notes and our 2014 Notes contain certain non-financial covenants, and as of April 2, 2011, we were in compliance with these covenants.

During fiscal 2004, we completed the private placement of $230.0 million aggregate principal amount of 1.50% convertible subordinated notes due 2010. 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. In fiscal 2009, we purchased and retired $23.0 million aggregate principal amount of our 2010 Notes at an average price of $82.83, which resulted in a gain of approximately $3.8 million. In fiscal 2010, we purchased and retired, at 100% of the original principal amount, $197.0 million of the aggregate principal amount 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.

Other Debt

During fiscal 2008, we entered into a loan denominated in Renminbi with a bank in Beijing, China, which is payable in April 2012. As of April 2, 2011, the principal balance of this loan was equivalent to approximately $7.0 million (with the amount fluctuating based on exchange rates). The proceeds were used for the expansion of our internal assembly facility. Interest is calculated at 95% of the People’s Bank of China benchmark interest rate at the end of each month and is payable on the twentieth day of the last month of each quarter (the People’s Bank of China benchmark interest rate for a three- to five-year loan was 6.45% effective as of February 9, 2011, which is the most recent published rate available as of April 2, 2011). We received a cash incentive from the Beijing Municipal Bureau of Industrial Development in support of the expansion of our China facility, which offset the amount of monthly interest expense for the first two years of the loan. During the first quarter of fiscal 2012, the balance of this loan is expected to be reclassified from “long-term debt” to “current portion of long-term debt” on our consolidated balance sheet.

During fiscal 2007, we entered into a $25.0 million asset-based equipment term loan financing agreement. The net proceeds of approximately $24.8 million (after payment of administrative fees and issuance costs totaling $0.2 million) were used primarily for wafer fabrication and assembly expansions. The equipment term loan is payable in equal monthly installments of principal and interest of approximately $0.5 million, which commenced on August 1, 2006, with a final balloon payment of approximately $3.0 million due on July 1, 2011. The interest rate on the equipment term loan is approximately 7.87%.

Pursuant to the 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 April 2, 2011, we were in compliance with these covenants.

Purchase Obligations

As of April 2, 2011, we had contractual obligations for the purchase of goods or services totaling approximately $57.5 million.

Other Contractual Obligations

In addition to the amounts shown in the Contractual Obligations table above, $32.9 million of unrecognized tax benefits have been recorded as liabilities and we are uncertain as to if, or when, such amounts may be settled.

As discussed in Note 8 to the Consolidated Financial Statements, we have an unfunded pension plan in Germany with a benefit obligation of approximately $3.3 million as of April 2, 2011. Pension benefit payments are not included in the schedule above as they are not available for all periods presented. Pension benefit payments were less than $0.1 million for fiscal 2011 and are expected to be less than $0.1 million for fiscal 2012.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The preparation of consolidated financial statements requires management to use judgment and estimates. The level of uncertainty in estimates and assumptions increases with the length of time until the underlying transactions are completed. Actual results could differ from those estimates. The accounting policies that are most critical in the preparation of our consolidated financial statements are those that are both important to the presentation of our financial condition and results of operations and require significant judgment and estimates on the part of management. Our critical accounting policies are reviewed periodically with the Audit Committee of the Board of Directors. We also have other policies that we consider key accounting policies, such as policies for revenue recognition (see Note 1 to the Consolidated Financial Statements); however, these policies typically do not require us to make estimates or judgments that are difficult or subjective.

Inventory Reserves. The valuation of inventory requires us to estimate obsolete or excess inventory. The determination of obsolete or excess inventory requires us to estimate the future demand for our products within specific time horizons, generally six to 12 months. The estimates of future demand that we use in the valuation of inventory reserves are the same as those used in our revenue forecasts and are also consistent with the estimates used in our manufacturing plans to enable consistency between inventory valuation and build decisions. Product-specific facts and circumstances reviewed in the inventory valuation process include a review of the customer base, market conditions, and customer acceptance of our products and technologies, as well as an assessment of the selling price in relation to the product cost.

Historically, inventory reserves have fluctuated as new technologies have been introduced and customers’ demand has shifted. Inventory reserves had less than a 1% impact on margins in fiscal years 2011 and 2010. During fiscal 2009, we experienced a significant negative impact on margins as customer demand dramatically decreased as a result of the economic downturn. If our demand forecast for specific products is greater than actual demand and we fail to reduce manufacturing output accordingly, we could be required to increase our reserves, which would have a negative impact on our gross profit.

Goodwill and Intangible Assets. Goodwill is recorded when the purchase price paid for a business exceeds the estimated fair value of the net identified tangible and intangible assets acquired. Intangibles are recorded when such assets are acquired by purchase or license. The value of our intangibles, including goodwill, could be impacted by future adverse changes such as: (i) any future declines in our operating results; (ii) a decline in the value of technology company stocks, including the value of our common stock; (iii) a prolonged or more significant slowdown in the worldwide economy or the semiconductor industry; or (iv) any failure to meet the performance projections included in our forecasts of future operating results.

Goodwill

We have determined that we have two reporting units as of fiscal 2011 (CPG and MPG) for purposes of allocating and testing goodwill. In evaluating our reporting units we first consider our operating segments and related components in accordance with FASB guidance. Goodwill is allocated to our reporting units that are anticipated to benefit from the synergies of the business combinations generating the underlying goodwill. As of April 2, 2011, our goodwill balance of $95.6 million is allocated solely to our MPG reporting unit.

We evaluate our goodwill for potential impairment on an annual basis or whenever events or circumstances indicate that an impairment may have occurred. We test for impairment using a two-step process. The first step of the goodwill impairment test is to identify potential impairment by comparing the estimated fair value of each reporting unit containing our goodwill with the related carrying amount of the reporting unit.

We have historically used both the income and market approaches to estimate the fair value of our reporting units. The income approach involves discounting future estimated cash flows. The sum of the reporting unit cash flow projections is compared to our market capitalization in a discounted cash flow framework to calculate an overall implied internal rate of return (or discount rate) for the Company. Our market capitalization is adjusted to a control basis assuming a reasonable control premium, which resulted in an implied discount rate. This implied discount rate serves as a baseline for estimating the specific discount rate for each reporting unit.

The discount rate used is the value-weighted average of our estimated cost of equity and debt (“cost of capital”) derived using both known and estimated customary market metrics. Our weighted average cost of capital is adjusted for each reporting unit to reflect a risk factor, if necessary, for each reporting unit. We perform sensitivity tests with respect to growth rates and discount rates used in the income approach. We believe the income approach is appropriate because it provides a fair value estimate based upon the respective reporting unit’s expected long-term operations and cash flow performance.

In applying the market approach, valuation multiples are derived from historical and projected operating data of selected guideline companies, which are evaluated and adjusted, if necessary, based on the strengths and weaknesses of the reporting unit relative to the selected guideline companies. The valuation multiples are then applied to the appropriate historical and/or projected operating data of the reporting unit to arrive at an indication of fair value. We believe the market approach is appropriate because it provides a fair value using multiples from companies with operations and economic characteristics similar to our reporting units. We weighted the results of the income approach and the results of the market approach at 60% and 40%, respectively. The income approach was given a higher weight because it has a more direct correlation to the specific economics of the reporting units than the market approach, which is based on multiples of companies that, although comparable, may not have the exact same mix of products and may not have the exact same systemic or non-systemic risk factors as our reporting units. Our methodologies used for valuing goodwill during fiscal 2011 have not changed as compared to fiscal years 2010 and 2009.

If the fair value of the reporting unit is determined to be less than the carrying value, we perform a step-two analysis in order to determine the implied fair value of each reporting unit’s goodwill and determine the amount of the impairment of goodwill. Determining the implied fair value of goodwill requires valuation of a reporting unit’s tangible and intangible assets and liabilities in a manner similar to the allocation of purchase price in a business combination. For purposes of determining the implied fair value of goodwill, the income tax bases of a reporting unit’s assets and liabilities implicit in the tax structure is assumed in the estimation of fair value of the reporting unit in step-one.

We conduct our annual goodwill impairment test on the first day of the fourth quarter in each fiscal year, and did so in fiscal years 2011 and 2010 without a need to expand the impairment test to step two. However, during fiscal 2009, indicators of potential impairment caused us to conduct an interim impairment test, which was performed as of November 22, 2008. See Note 5 to the Consolidated Financial Statements for additional information regarding fiscal 2009 goodwill impairment.

Inherent in such fair value determinations of our reporting units are significant judgments and estimates, including assumptions about our future revenue, profitability and cash flows, our operational plans and our interpretation of current economic indicators and market valuations. To the extent these assumptions are incorrect or there are further declines in our business outlook, additional goodwill impairment charges may be recorded in future periods.

For fiscal years 2011 and 2010, the material assumptions used for the income approach were 10 years of projected net cash flows, a discount rate of 16.5% (2011) and 16.0% (2010) and a long-term growth rate of 4% for the MPG reporting unit. We considered historical rates and current market conditions when determining the discount and growth rates used in our analysis. The material assumptions used for the income approach in fiscal years 2011 and 2010 were consistent as compared to fiscal 2009, except the discount rate for the MPG reporting unit was 18% for fiscal 2009 as a result of missed projections.

A one percentage point decrease in the discount rate would have increased the fair value of the MPG reporting unit by approximately $45.0 million, while a one percentage point increase in the discount rate would have decreased the fair value of the MPG reporting unit by approximately $38.0 million. A one percentage point decrease in the long-term growth rate would have decreased the fair value of the MPG

reporting unit by approximately $13.0 million, while a one percentage point increase in the long-term growth rate would have increased the fair value of the MPG reporting unit by approximately $16.0 million.

Intangible Assets

Intangible assets consist primarily of technology licenses and assets resulting from business combinations. Technology licenses are amortized on a straight-line basis over the lesser of the estimated useful life of the technology or the term of the license agreement, ranging from approximately 5 years to 15 years. Acquired product technology and customer relationships are also amortized on a straight-line basis over the estimated useful life, ranging from 3 years to 10 years.

We regularly review identified intangible assets to determine if facts and circumstances indicate that the useful life is shorter than the Company originally estimated or that the carrying amount of the assets may not be recoverable. If such facts and circumstances exist, we assess the recoverability of identified intangible assets by comparing the projected undiscounted net cash flows associated with the related asset or group of assets over their remaining lives against their respective carrying amounts. Impairments, if any, are based on the excess of the carrying amount over the fair value of those assets and occur in the period in which the impairment determination was made. See Note 5 to the Consolidated Financial Statements for additional information regarding fiscal 2009 identified intangible impairment.

The value of acquired in-process research and development is determined by estimating the costs to develop the purchased in-process research and development into a commercially viable product, estimating the resulting cash flows from the sale of the products resulting from the completion of the in-process research and development and discounting the net cash flows using an appropriate discount rate, net of returns on contributory assets. For acquisitions prior to fiscal 2010, acquired in-process research and development with no future alternative use was expensed at the acquisition date. For subsequent acquisitions, acquired in-process research and development with no future alternative use will be capitalized in accordance with FASB ASC Topic 805, “Business Combinations.”

The value of acquired developed technology is determined by discounting forecasted cash flows directly related to the existing product technology, net of returns on contributory assets.

The value of acquired customer relationships is based on the benefit derived from the incremental revenue and related cash flows as a direct result of the customer relationship. These forecasted cash flows are discounted to present value using an appropriate discount rate.

Impairment of Long-lived Assets. We review the carrying values of all long-lived assets whenever events or changes in circumstances indicate that such carrying values may not be recoverable. Factors that we consider in deciding when to perform an impairment review include significant under-performance of a business, significant negative industry or economic trends, and significant changes or planned changes in our use of assets.

In making impairment determinations for long-lived assets, we utilize certain assumptions, including but not limited to: (i) estimations and quoted market prices of the fair market value of the assets; and (ii) estimations of future cash flows expected to be generated by these assets, which are based on additional assumptions such as asset utilization, length of service that the asset will be used in our operations and estimated salvage values.

Share-Based Compensation. FASB ASC Topic 718 requires all share-based payments, including grants of stock options and restricted stock units, to be recognized in our financial statements based on their respective grant date fair values. Under this standard, the fair value of each employee stock option is estimated on the date of grant using an option pricing model that meets certain requirements. We currently use the Black-Scholes option pricing model to estimate the fair value of our share-based payments. The Black-Scholes model meets the requirements of FASB ASC Topic 718, but the fair values generated by the model may not be indicative of the actual fair values of our share-based awards as this model does not consider certain factors important to share-based awards, such as continued employment, periodic vesting requirements and limited transferability. The determination of the fair value of share-based payment awards utilizing the Black-Scholes model is affected by our stock price and a number of assumptions, including expected

volatility, expected life, risk-free interest rate and expected dividends.

Expected Volatility

We use implied volatility based on publicly traded options, as we believe implied volatility is more useful than historical volatility in estimating expected volatility because it is generally reflective of both historical volatility and expectations of how future volatility will differ from historical volatility. In determining the appropriateness of implied volatility, we considered: (i) the volume of market activity of publicly traded options and determined that there was sufficient market activity; (ii) the ability to reasonably match the input variables of options publicly traded to those of options granted by us, such as the date of grant and the exercise price, and determined that the input assumptions were comparable; and (iii) the length of term of publicly traded options used to derive implied volatility, which is generally six months to two years, and determined that the length of term was sufficient.

If we determined that another method of estimating expected volatility was more reasonable than our current method, or if another method for calculating expected volatility was prescribed by authoritative guidance, the fair value calculated for share-based awards could change significantly. Higher volatility results in an increase to share-based compensation determined at the date of grant.

Expected Term

The expected life of employee stock options represents the weighted-average period that the stock options are expected to remain outstanding. Our method of calculating the expected term of an option is based on the assumption that all outstanding options will be exercised at the midpoint of the current date and full contractual term, combined with the average life of all options that have been exercised or cancelled. We believe that method provides a better estimate of the future expected life based on analysis of historical exercise behavioral data.

Risk-Free Interest Rate

The risk-free interest rate assumption is based on observed interest rates appropriate for the expected terms of our stock options.

Expected Dividend Yield

The dividend yield assumption is based on our history and expectation of dividend payouts.

Forfeitures

The amount of share-based compensation expense in fiscal years 2011, 2010 and 2009 was reduced for estimated forfeitures based on historical experience. Forfeitures are required to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. We will evaluate the assumptions used to value stock awards on a quarterly basis. If factors change and we employ different assumptions, share-based compensation expense may differ significantly from what we have recorded in the past. To the extent that we grant additional equity securities to employees or we assume unvested securities in connection with any acquisitions, our share-based compensation expense will be increased by the additional unearned compensation resulting from those additional grants or acquisitions. The fair value of our restricted stock units is based on the fair market value of our common stock on the date of grant. Share-based compensation expense recognized in our financial statements in fiscal years 2011, 2010 and 2009 is based on awards that are ultimately expected to vest.

Income Taxes. In determining income for financial statement purposes, we must make certain estimates and judgments in the calculation of tax expense, the resultant tax liabilities, and in the recoverability of deferred tax assets that arise from temporary differences between the tax and financial statement recognition of revenue and expense.

As part of our financial process, we assess the likelihood that our deferred tax assets can be recovered. If recovery is not likely, the provision for taxes must be increased by recording a reserve in the form of a valuation allowance for the deferred tax assets that are estimated not to be ultimately recoverable. In this process, certain relevant criteria are evaluated including: the amount of income or loss in prior years, the existence of deferred tax liabilities that can be used to absorb deferred tax assets, the taxable income in prior carryback years that can be used to absorb net operating losses and credit carrybacks, future expected

taxable income in the various taxing jurisdictions in which we have operations, and prudent and feasible tax planning strategies. The valuation allowance against the U.K. deferred tax assets which existed as of the beginning of fiscal 2011 was fully released during the year. As of the beginning and end of fiscal 2011, valuation allowances were provided that substantially offset our domestic and other foreign deferred tax assets, net of liabilities. Our judgment regarding realizability, including future taxable income, may change due to future market conditions, changes in U.S. or international tax laws and other factors. These changes, if any, may require material adjustments to these net deferred tax assets and an accompanying reduction or increase in net income in the period when such determinations are made.

As part of our financial process, we also assess the likelihood that our tax reporting positions will ultimately be sustained. Our judgment regarding the sustainability of our tax reporting positions may change in the future due to changes in U.S. or international tax laws and other factors. These changes, if any, may require material adjustments to the related net deferred tax assets or accrued income tax liabilities and an accompanying reduction or increase in net income in the period when such determinations are made.

RECENT ACCOUNTING PRONOUNCMENTS

In January 2010, the FASB issued amended standards that require additional fair value disclosures. These amended standards require disclosures about inputs and valuation techniques used to measure fair value, as well as disclosures about significant transfers, beginning in the fourth quarter of fiscal 2010. Additionally, these amended standards require presentation of disaggregated activity within the reconciliation for fair value measurements using significant unobservable inputs (Level 3), beginning in the first quarter of fiscal 2012. We believe that adoption of this new guidance will not have a material impact on our financial statements.

In October 2009, the FASB issued new standards for revenue recognition with multiple deliverables. These new standards impact the determination of when the individual deliverables included in a multiple-element arrangement may be treated as separate units of accounting. Additionally, these new standards modify the manner in which the transaction consideration is allocated across the separately identified deliverables by no longer permitting the residual method of allocating arrangement consideration. These new standards are required to be adopted in the first quarter of fiscal 2012. We believe that adoption of this new guidance will not have a material impact on our financial statements.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Financial Risk Management

We are exposed to financial market risks, including changes in interest rates, currency exchange rates and certain commodity prices. The overall objective of our financial risk management program is to seek a reduction in the potential negative earnings effects from changes in interest rates, foreign exchange rates and commodity prices arising from our business activities. We manage these financial exposures through operational means and by using various financial instruments. These practices may change as economic conditions change.

Interest Rates

We are exposed to interest rate risk primarily from our investments in available-for-sale securities. Our available-for-sale securities are predominantly comprised of U.S. government/agency securities, in accordance with an investment policy approved by our Board of Directors. We continually monitor our exposure to changes in interest rates and the credit ratings of issuers with respect to our available-for-sale securities. As a result of this monitoring and recent volatility of the financial markets, the Board of Directors adopted a more conservative investment strategy, and we are currently investing in lower risk and consequently lower interest-bearing investments. Accordingly, we believe that the effects of changes in interest rates and the credit ratings of these issuers are limited and would not have a material impact on our financial condition or results of operations. However, it is possible that we would be at risk if interest rates or the credit ratings of these issuers were to change unfavorably.

At April 2, 2011, we held available-for-sale investments with an estimated fair value of $193.8 million. We do not purchase financial instruments for trading or speculative purposes. Our investments are classified as available-for-sale securities and are recorded on the balance sheet at fair value with unrealized gains and losses reported as a

separate component of accumulated other comprehensive income. Our investments earned an average annual interest rate of approximately 0.3% in fiscal 2011 or approximately $0.5 million in interest income. In fiscal 2010, our investments earned an average annual interest rate of approximately 0.5% in fiscal 2010 or approximately $0.9 million in interest income. We do not have any investments denominated in foreign currencies and therefore are not subject to foreign currency risk on such investments.

Debt and Capital Lease Obligations

Convertible Debt

In April 2007, we issued $200 million aggregate principal amount of 0.75% convertible subordinated notes due on April 15, 2012 and $175 million aggregate principal amount of 1.00% convertible subordinated notes due on April 15, 2014. The net proceeds from the offering were approximately $366.2 million after payment of the underwriting discount and expenses of the offering totaling approximately $8.8 million, which are being amortized as interest expense over the term of the two series of notes based on the effective interest method. Interest on both series of the notes is payable in cash semiannually in arrears on April 15 and October 15 of each year, and we began paying interest on October 15, 2007.

During fiscal 2011, we purchased and retired $135.5 million aggregate principal amount of our 2012 Notes for an average price of $99.32, which resulted in a loss of approximately $2.4 million. During fiscal 2010, we purchased and retired $2.3 million aggregate principal amount of the 2012 Notes at an average price of $78.56, which resulted in a gain of approximately $0.3 million.

In fiscal 2010, we purchased and retired $7.8 million aggregate principal amount of the 2014 Notes at an average price of $61.55, which resulted in a gain of approximately $1.6 million. In fiscal 2009, we purchased and retired $32.3 million aggregate principal amount of the 2014 Notes at an average price of $41.47, which resulted in a gain of approximately $10.6 million.

In fiscal 2009, we purchased and retired $23.0 million aggregate principal amount of the 2010 Notes at an average price of $82.83, which resulted in a gain of approximately $3.8 million. In fiscal 2010, we purchased and retired, at 100% of the original principal amount, $197.0 million aggregate principal amount 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.

Because our convertible subordinated notes have fixed interest rates, we do not have significant interest rate exposure on our long-term debt. However, the fair value of the convertible subordinated notes is subject to significant fluctuations due to their convertibility into shares of our common stock and other market conditions. The fair value of these convertible subordinated notes is also sensitive to fluctuations in the general level of U.S. interest rates. As of April 2, 2011, the 2012 Notes and the 2014 Notes had fair values of $66.1 million (excluding $137.8 million of the aggregate principal amount of the 2012 Notes that were purchased and retired as of April 2, 2011) and $145.0 million (excluding $40.1 million of the aggregate principal amount of the 2014 Notes that were purchased and retired as of April 2, 2011), respectively.

Other Debt

During fiscal 2008, we entered into a loan denominated in Renminbi with a bank in Beijing, China, which is payable in April 2012. As of April 2, 2011, the principal balance of this loan was equivalent to approximately $7.0 million (with the amount fluctuating based on exchange rates). The proceeds were used for the expansion of the Company’s internal assembly facility. Interest is calculated at 95% of the People’s Bank of China benchmark interest rate at the end of each month and is payable on the twentieth day of the last month of each quarter (the People’s Bank of China benchmark interest rate for a three- to five-year loan was 6.45% effective as of February 9, 2011, which is the most recent published rate available as of April 2, 2011). We received a cash incentive from the Beijing Municipal Bureau of Industrial Development in support of the expansion of our China facility. This incentive offset the amount of monthly interest expense for the first two years of the loan, minimizing our interest rate exposure.

During fiscal 2007, we entered into a $25.0 million asset-based financing agreement (“equipment term loan”). The net proceeds from the equipment term loan were approximately $24.8 million after payment of administrative fees and issuance costs totaling $0.2 million, which are being amortized as interest expense over the term of the loan based

on the effective interest method. The equipment term loan is payable in equal monthly installments of principal and interest of approximately $0.5 million, commencing on August 1, 2006, with a final balloon payment of approximately $3.0 million due on July 1, 2011. The interest rate on the equipment term loan is approximately 7.87%.

We would be exposed to interest rate risk if we used additional financing to fund operating and investing activities. The interest rate that we may be able to obtain on future financings will depend on market conditions at that time and may differ from the rates that we have secured in the past.

Capital Lease Obligations

We lease certain equipment and computer hardware and software under non-cancelable lease agreements that are accounted for as capital leases. Equipment under capital lease arrangements and interest expense were immaterial as of April 2, 2011, resulting in limited interest rate exposure.

Currency Exchange Rates

As a global company, our results are affected by movements in currency exchange rates. Our exposure may increase or decrease over time as our foreign business levels fluctuate in the countries where we have operations, and these changes could have a material impact on our financial results. Our functional currency is typically the U.S. dollar. We have foreign operations in Europe and Asia and a substantial portion of our revenue is derived from sales to customers outside the United States. Our international revenue is primarily denominated in U.S. dollars. Operating expenses and certain working capital items related to our foreign-based operations are, in some instances, denominated in the local foreign currencies and therefore are affected by changes in the U.S. dollar exchange rate in relation to foreign currencies, such as the Renminbi, Euro and Pound Sterling. If the U.S. dollar weakens compared to the Renminbi, Euro, Pound Sterling and other currencies, our operating expenses for foreign operations will be higher when remeasured back into U.S. dollars. We seek to manage our foreign exchange risk in part through operational means.

For fiscal 2011, we incurred a foreign currency gain of $2.1 million compared to a foreign currency loss of $0.5 million in fiscal 2010, which is recorded in “other (expense) income.” In fiscal 2011, the $2.6 million gain year-over-year was driven by the mix of our balance sheet accounts denominated in the local foreign currencies and the depreciation of the U.S. dollar against the Renminbi, Euro and Pound Sterling.

Our financial instrument holdings, including foreign receivables, cash, payables and debt at April 2, 2011, were analyzed to determine their sensitivity to foreign exchange rate changes. In this sensitivity analysis, we assumed that the change in one currency’s rate relative to the U.S. dollar would not have an effect on other currencies’ rates relative to the U.S. dollar. All other factors were held constant. If the U.S. dollar declined in value 10% in relation to the re-measured foreign currency instruments, our net income would have increased by approximately $3.7 million. If the U.S. dollar increased in value 10% in relation to the re-measured foreign currency instruments, our net income would have decreased by approximately $3.0 million.

Commodity Prices

We routinely use precious metals in the manufacture of our products. Supplies for such commodities may from time to time become restricted, or general market factors and conditions may affect the pricing of such commodities. In fiscal 2011, the price of gold continued to increase sharply, and certain of our supply chain partners assessed surcharges to compensate for the resultant increase in manufacturing costs. We are currently developing technology that would replace gold with lower-cost materials to reduce this exposure. We also have an active reclamation process to capture any unused gold. While we continue to attempt to mitigate the risk of similar increases in commodities-related costs, there can be no assurance that we will be able to successfully safeguard against potential short-term and long-term commodity price fluctuations.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

		Page
Consolidated Balance Sheets			45
Consolidated Statements of Operations			47
Consolidated Statements of Shareholders’ Equity			48
Consolidated Statements of Cash Flows			49
Notes to Consolidated Financial Statements			51
Report of Management on Internal Control Over Financial Reporting			87
Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting			88
Report of Independent Registered Public Accounting Firm			89

RF Micro Devices, Inc. and Subsidiaries

		April 2,				April 3,
		2011				2010
Assets
Current assets:
Cash and cash equivalents		$	131,760			$	104,778
Restricted cash and trading security investments (Notes 1 & 3)			422				17,698
Short-term investments (Notes 1 & 3)			159,881				134,882
Accounts receivable, less allowance of $800 and $802 as of April 2, 2011 and April 3, 2010, respectively			120,375				108,219
Inventories (Notes 1 & 4)			149,813				122,509
Prepaid expenses			6,960				5,415
Other receivables (Note 1)			10,218				34,854
Other current assets (amount recorded at fair value is $2,302 at April 3, 2010) (Notes 3 & 11)			20,730				20,469
Total current assets			600,159				548,824
Property and equipment:
Land			3,706				3,706
Building			91,383				90,767
Machinery and equipment			528,334				518,942
Leasehold improvements			78,783				76,174
Furniture and fixtures			11,316				11,441
Computer equipment and software			32,836				33,516
			746,358				734,546
Less accumulated depreciation			(541,318	)			(490,098	)
			205,040				244,448
Construction in progress			4,438				2,637
Total property and equipment, net			209,478				247,085
Goodwill (Notes 1, 5 & 6)			95,628				95,628
Intangible assets, net (Notes 1 & 5)			83,685				102,169
Long-term investments (Notes 1 & 3)			2,694				2,175
Other non-current assets (Notes 1 & 11)			33,749				18,127
Total assets		$	1,025,393			$	1,014,008

See accompanying notes.

RF Micro Devices, Inc. and Subsidiaries
Consolidated Balance Sheets
(In thousands)

		April 2,				April 3,
		2011				2010
Liabilities and shareholders’ equity
Current liabilities:
Accounts payable		$	89,490			$	82,448
Accrued liabilities			41,483				41,805
Current portion of long term debt, net of unamortized discount (Note 7)			3,852				15,053
No net cost credit line (Note 7)			—				12,900
Other current liabilities (Note 9)			112				527
Total current liabilities			134,937				152,733
Long-term debt, net of unamortized discount (Note 7)			177,343				289,837
Other long-term liabilities (Notes 8, 9, 10 & 11)			36,758				41,354
Total liabilities			349,038				483,924
Commitments and contingent liabilities (Note 9)
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; 275,376 and 269,106 shares issued and outstanding at April 2, 2011 and April 3, 2010, respectively			966,764				961,216
Additional paid-in capital			276,964				261,117
Accumulated other comprehensive income, net of tax			393				75
Accumulated deficit			(567,766	)			(692,324	)
Total shareholders’ equity			676,355				530,084
Total liabilities and shareholders’ equity		$	1,025,393			$	1,014,008

See accompanying notes.

RF Micro Devices, Inc. and Subsidiaries

		Fiscal Year
		2011				2010				2009
Revenue		$	1,051,756			$	978,393			$	886,506
Operating costs and expenses:
Cost of goods sold			662,085				623,224				669,163
Research and development			141,097				138,960				170,778
Marketing and selling			59,470				56,592				64,946
General and administrative			48,003				48,316				50,352
Goodwill impairment (Note 5)			—				—				619,551
Other operating expense (Notes 5 and 10)			1,582				4,895				181,012
Total operating costs and expenses			912,237				871,987				1,755,802
Income (loss) from operations			139,519				106,406				(869,296	)
Interest expense			(17,140	)			(23,997	)			(25,893	)
Interest income			787				1,291				5,337
(Loss) gain on retirement of convertible subordinated notes (Note 7)			(2,412	)			1,540				14,382
Other income (expense)			2,751				(406	)			(4,538	)
Income (loss) before income taxes		$	123,505			$	84,834			$	(880,008	)
Income tax benefit (expense) (Note 11)			1,053				(13,815	)			(7,896	)
Net income (loss)		$	124,558			$	71,019			$	(887,904	)
Net income (loss) per share (Note 12):
Basic		$	0.46			$	0.27			$	(3.38	)
Diluted		$	0.44			$	0.25			$	(3.38	)
Shares used in per share calculation (Note 12):
Basic			272,575				267,349				262,493
Diluted			280,394				289,429				262,493

See accompanying notes.

RF Micro Devices, Inc. and Subsidiaries

														Accumulated				Retained
										Additional				Other				Earnings
		Common Stock								Paid-in				Comprehensive				(Accumulated
		Shares				Amount				Capital				Income				Deficit)				Total
Balance, March 29, 2008			260,643			$	955,390			$	215,518			$	632			$	124,561			$	1,296,101
Comprehensive loss:
Net loss			—				—				—				—				(887,904	)			(887,904	)
Unrealized loss on marketable securities, net of tax			—				—				—				(1,983	)			—				(1,983	)
Reclassification adjustments on marketable securities, net of tax			—				—				—				2,101				—				2,101
Change in pension liability, net of tax			—				—				—				117				—				117
Foreign currency translation adjustment			—				—				—				(698	)			—				(698	)
Total comprehensive loss																							(888,367	)
Repurchase of convertible subordinated notes, net of tax			—				—				(262	)			—				—				(262	)
Exercise of stock options and vesting of restricted stock units			2,392				1,612				—				—				—				1,612
Issuance of common stock in connection with employee stock purchase plan			1,000				1,740				—				—				—				1,740
Share-based compensation expense			—				—				21,138				—				—				21,138
Balance, March 28, 2009			264,035			$	958,742			$	236,394			$	169			$	(763,343	)		$	431,962
Comprehensive income:
Net income			—				—				—				—				71,019				71,019
Unrealized loss on marketable securities, net of tax			—				—				—				(50	)			—				(50	)
Change in pension liability, net of tax			—				—				—				(123	)			—				(123	)
Foreign currency translation adjustment			—				—				—				79				—				79
Total comprehensive income																							70,925
Repurchase of convertible subordinated notes, net of tax			—				—				(540	)			—				—				(540	)
Exercise of stock options and vesting of restricted stock units			4,132				161				—				—				—				161
Issuance of common stock in connection with employee stock purchase plan			939				2,313				—				—				—				2,313
Share-based compensation expense			—				—				25,263				—				—				25,263
Balance, April 3, 2010			269,106			$	961,216			$	261,117			$	75			$	(692,324	)		$	530,084
Comprehensive income:
Net income			—				—				—				—				124,558				124,558
Unrealized gain on marketable securities, net of tax			—				—				—				42				—				42
Change in pension liability, net of tax			—				—				—				66				—				66
Foreign currency translation adjustment			—				—				—				210				—				210
Total comprehensive income																							124,876
Repurchase of convertible subordinated notes, net of tax			—				—				(9,579	)			—				—				(9,579	)
Exercise of stock options and vesting of restricted stock units, net of shares withheld for employee taxes			7,225				14,699								—				—				14,699
Issuance of common stock in connection with employee stock purchase plan			742				3,501				—				—				—				3,501
Repurchase of common stock, including transaction costs			(1,697	)			(12,652	)			—				—				—				(12,652	)
Share-based compensation expense			—				—				25,426				—				—				25,426
Balance, April 2, 2011			275,376			$	966,764			$	276,964			$	393			$	(567,766	)		$	676,355

See accompanying notes.

RF Micro Devices, Inc. and Subsidiaries

		Fiscal Year
		2011				2010				2009
Cash flows from operating activities:
Net income (loss)		$	124,558			$	71,019			$	(887,904	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation			63,093				72,333				85,900
Intangible amortization			18,457				19,020				26,178
Non-cash interest expense and amortization of debt issuance costs			13,875				17,634				18,064
Investment discount amortization, net			(272	)			(271	)			(505	)
Excess tax benefit from exercises of stock options			(111	)			—				—
Deferred income taxes			(21,633	)			(2,426	)			(2,177	)
Foreign currency adjustments			(1,181	)			423				3,653
Acquired in-process research and development cost			—				—				1,400
Goodwill impairment			—				—				619,551
Intangible impairment			—				281				66,960
Asset impairments (including restructuring impairments)			139				1,974				76,005
Loss (gain) on retirement of convertible subordinated notes			2,412				(1,540	)			(14,382	)
Income from equity investment			(544	)			—				—
Loss on disposal of assets, net			15				287				658
Share-based compensation expense			25,353				25,632				23,712
Changes in operating assets and liabilities:
Accounts receivable, net			(12,086	)			(17,905	)			26,774
Inventories			(27,161	)			(8,574	)			75,588
Prepaid expense and other current and non-current assets			23,864				(24,714	)			17,036
Accounts payable			6,736				35,257				(32,573	)
Accrued liabilities			(947	)			(1,522	)			(2,913	)
Income tax payable/recoverable			(118	)			5,481				4,125
Other liabilities			(1,062	)			(6,731	)			7,011
Net cash provided by operating activities			213,387				185,658				112,161
Investing activities:
Purchase of securities available-for-sale			(287,617	)			(387,895	)			(124,501	)
Proceeds from maturities of securities available-for-sale			282,523				346,762				136,142
Proceeds from sales of trading securities			—				950				—
Purchase of property and equipment			(25,714	)			(8,445	)			(46,467	)
Purchase of businesses, net of cash received and transaction costs			—				—				(19,874	)
Final retainer received from sale of substantially all Bluetooth® assets			—				—				5,850
Purchase of intangibles			—				(279	)			(400	)
Proceeds from sale of property and equipment			599				2,712				2,185
Net cash used in investing activities			(30,209	)			(46,195	)			(47,065	)