RF Micro Devices Achieves Record Quarterly Revenue and Record

RF Micro Devices Achieves Record Quarterly Revenue and Record Non-GAAP Diluted EPS

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Financial Tables To Follow

RF MICRO DEVICES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share data) (Unaudited)
	Three Months Ended
		October 2, 2010		October 3, 2009
Total revenue	$	285,794	$	254,757

Costs and expenses:
Cost of goods sold		177,139		163,208
Research and development		35,604		34,846
Marketing and selling		15,094		14,741
General and administrative		14,836		16,721
Other operating expense		729		1,114

Total costs and expenses		243,402		230,630

Operating income		42,392		24,127
Other expense		(4,816)		(6,047)

Income before income taxes	$	37,576	$	18,080
Income tax expense		(2,493)		(3,501)

Net income	$	35,083	$	14,579

Net income per share, diluted	$	0.13	$	0.05

Weighted average outstanding diluted shares		277,458		298,668

RF MICRO DEVICES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share data) (Unaudited)
	Six Months Ended
		October 2, 2010		October 3, 2009
Total revenue	$	559,636	$	467,297

Costs and expenses:
Cost of goods sold		348,575		301,746
Research and development		71,705		70,479
Marketing and selling		29,462		28,310
General and administrative		25,905		27,933
Other operating expense		1,038		2,650

Total costs and expenses		476,685		431,118

Operating income		82,951		36,179
Other expense		(9,357)		(10,245)

Income before income taxes	$	73,594	$	25,934
Income tax expense		(10,397)		(6,571)

Net income	$	63,197	$	19,363

Net income per share, diluted	$	0.23	$	0.07

Weighted average outstanding diluted shares		277,696		297,573

RF MICRO DEVICES, INC. AND SUBSIDIARIES RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (In thousands, except percentages and per share data) (Unaudited)
	Three Months Ended
		October 2, 2010		July 3, 2010		October 3, 2009

GAAP operating income	$	42,392	$	40,559	$	24,127
Share-based compensation expense		9,135		5,311		11,125
Amortization of intangible assets		4,615		4,615		4,804
Restructuring charges related to fiscal 2009 strategic restructuring and adverse macroeconomic conditions		110		205		1,072
Other expenses (restructuring, loss on PP&E, integration, start-up costs and other non-cash expenses)		881		999		609
Non-GAAP operating income		57,133		51,689		41,737

GAAP net income		35,083		28,115		14,579
Share-based compensation expense		9,135		5,311		11,125
Amortization of intangible assets		4,615		4,615		4,804
Restructuring charges related to fiscal 2009 strategic restructuring and adverse macroeconomic conditions		110		205		1,072
Other expenses (restructuring, loss on PP&E, integration, start-up costs, and other non-cash expenses)		881		999		609
Loss on retirement of convertible subordinated notes		1,646		-		-
Non-cash interest expense on convertible subordinated notes		3,262		4,414		4,602
Tax adjustments		(2,415)		684		151

Non-GAAP net income		52,317		44,343		36,942
Plus: Income impact of assumed conversions for interest on 1.50% convertible notes		-		15		768
Non-GAAP net income plus assumed conversion of notes- Numerator for diluted income per share	$	52,317	$	44,358	$	37,710

GAAP and Non-GAAP weighted average outstanding diluted shares		277,458		277,933		298,668

Non-GAAP net income per share, diluted	$	0.19	$	0.16	$	0.13


	Three Months Ended
		October 2, 2010			July 3, 2010			October 3, 2009
GAAP gross margin	$	108,655	38.0%	$	102,407	37.4%	$	91,549	35.9%
Adjustment for intangible amortization		3,514	1.2%		3,514	1.3%		3,705	1.5%
Adjustment for share-based compensation		1,248	0.5%		960	0.3%		1,389	0.5%
Other expenses (restructuring, integration and other non-cash expenses)		262	0.1%		508	0.2%		385	0.2%
Non-GAAP gross margin	$	113,679	39.8%	$	107,389	39.2%	$	97,028	38.1%

RF MICRO DEVICES, INC. AND SUBSIDIARIES ADDITIONAL SELECTED NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS (In thousands, except percentages) (Unaudited)
	Three Months Ended
Non-GAAP Operating Income	October 2, 2010
(as a percentage of sales)

GAAP operating income	14.8%
Share-based compensation expense	3.2%
Amortization of intangible assets	1.6%
Restructuring charges related to fiscal 2009 strategic restructuring and adverse macroeconomic conditions	0.1%
Other expenses (restructuring, loss on PP&E, integration, start-up costs and other non-cash expenses)	0.3%
Non-GAAP operating income	20.0%


	Three Months Ended
	October 2, 2010		July 3, 2010		October 3, 2009
GAAP research and development expense	$	35,604	$	36,101	$	34,846
Less:
Share-based compensation expense		1,392		1,343		1,399
Amortization of intangible assets		14		14		12
Other expenses (restructuring, integration and other non-cash expenses)		-		384		118
Non-GAAP research and development expense	$	34,198	$	34,360	$	33,317

	Three Months Ended
	October 2, 2010		July 3, 2010		October 3, 2009
GAAP marketing and selling expense	$	15,094	$	14,368	$	14,741
Less:
Share-based compensation expense		1,493		1,198		1,915
Amortization of intangible assets		1,087		1,087		1,087
Other expenses (restructuring, integration and other non-cash expenses)		-		3		8
Non-GAAP marketing and selling expense	$	12,514	$	12,080	$	11,731

	Three Months Ended
	October 2, 2010		July 3, 2010		October 3, 2009
GAAP general and administrative expense	$	14,836	$	11,070	$	16,721
Less:
Share-based compensation expense		5,002		1,810		6,422
Other expenses (restructuring, integration)		-		-		17
Non-GAAP general and administrative expense	$	9,834	$	9,260	$	10,282

RF MICRO DEVICES, INC. AND SUBSIDIARIES ADDITIONAL SELECTED NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS (Unaudited)
Free Cash Flow (1)		Three Months Ended
Free Cash Flow (1)		October 2, 2010
(In millions)

Net cash provided by operating activities	$	61.3
Purchases of property and equipment		(5.2)
Free Cash Flow	$	56.1

(1) Free Cash Flow is calculated as net cash provided by operating activities minus property and equipment expenditures.


EBITDA (2)		Three Months Ended October 2, 2010
(In millions)

Net Income	$	35.1
Interest		3.9
Income Tax Expense		2.5
Depreciation		15.9
Amortization		4.6
EBITDA	$	62.0

(2) EBITDA is calculated by adjusting net income for interest expense and interest income, income tax expense, depreciation and intangible amortization.

RF MICRO DEVICES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited)
		October 2, 2010		April 3, 2010
ASSETS
Current assets:
Cash and cash equivalents	$	133,801	$	104,778
Restricted cash and trading security investments		439		17,698
Short-term investments		105,931		134,882
Accounts receivable, net		134,739		108,219
Inventories		130,887		122,509
Other current assets		62,776		60,738
Total current assets		568,573		548,824

Property and equipment, net		226,568		247,085
Intangible assets, net		92,912		102,169
Goodwill		95,628		95,628
Long-term investments		2,150		2,175
Other non-current assets		19,769		18,127
Total assets	$	1,005,600	$	1,014,008

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities		143,316		124,253
Current portion of long-term debt		6,459		15,053
Other short-term liabilities, net		7,804		13,427
Total current liabilities		157,579		152,733

Long-term debt, net		204,217		289,837
Other long-term liabilities		40,111		41,354
Total liabilities		401,907		483,924

Shareholders' equity		603,693		530,084

Total liabilities and shareholders' equity	$	1,005,600	$	1,014,008

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