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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 27, 2003
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER: 0-22511
-----------------
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, INCLUDING ZIP CODE)
(336) 664-1233
--------------------------------------------------
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
----- -----
As of November 5, 2003, there were 185,468,127 shares of the registrant's common
stock outstanding. Indicate by check mark whether the registrant is an
accelerated filer (as defined in Rule 12b-2 of the Exchange Act).
Yes X No
----- -----
RF MICRO DEVICES, INC. AND SUBSIDIARIES
INDEX
PART I - FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS PAGE
CONDENSED CONSOLIDATED BALANCE SHEETS AS OF SEPTEMBER
30, 2003 AND MARCH 31, 2003.............................
CONDENSED CONSOLIDATED STATEMENTS OF INCOME FOR THE
THREE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002..........
CONDENSED CONSOLIDATED STATEMENTS OF INCOME FOR THE
SIX MONTHS ENDED SEPTEMBER 30, 2003 AND 2002............
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR
THE SIX MONTHS ENDED SEPTEMBER 30, 2003 AND 2002........
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
ITEM 4. CONTROLS AND PROCEDURES
PART II - OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
PART I - FINANCIAL INFORMATION
ITEM 1.
RF MICRO DEVICES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
SEPTEMBER 30, MARCH 31,
2003 2003
---------------------- ----------------------
(UNAUDITED)
ASSETS
Current assets:
Cash and cash equivalents $ 198,034 $ 164,422
Short-term investments 112,781 92,187
Accounts receivable, net of allowances of $1,453 at
September 30, 2003 and $1,078 at March 31, 2003 80,733 66,849
Inventories (NOTE 3) 52,457 57,781
Recoverable income tax -- 6,330
Other current assets 6,725 5,052
--------- ---------
Total current assets 450,730 392,621
Property and equipment, net of accumulated depreciation of $156,305 at
September 30, 2003 and $128,968 at March 31, 2003 300,924 312,013
Goodwill 110,006 110,006
Long-term investments 63,610 59,440
Intangible assets, net of amortization of $9,663 at
September 30, 2003 and $6,073 at March 31, 2003 53,454 56,486
Other non-current assets 1,985 2,259
--------- ---------
Total assets $ 980,709 $ 932,825
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 34,568 $ 26,694
Accrued liabilities 18,805 20,185
Other current liabilities, net 30,187 30,661
--------- ---------
Total current liabilities 83,560 77,540
Long-term debt, net of unamortized discount of $5,983 as of September
30, 2003 and $4,135 as of March 31, 2003 324,017 295,865
Other long-term liability 4,814 2,020
--------- ---------
Total liabilities 412,391 375,425
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; 184,841 and
183,958 shares issued and outstanding at September 30, 2003 and
March 31, 2003, respectively 444,651 441,077
Additional paid-in capital 76,957 73,454
Deferred compensation (18,312) (18,700)
Accumulated other comprehensive income, net of tax (NOTE 5) 225 95
Retained earnings 64,797 61,474
--------- ---------
Total shareholders' equity 568,318 557,400
--------- ---------
Total liabilities and shareholders' equity $ 980,709 $ 932,825
========= =========
See accompanying Notes to Condensed Consolidated Financial Statements
RF MICRO DEVICES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)
THREE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
2003 2002
------------- -------------
Total revenue $ 163,464 $ 119,735
Operating costs and expenses:
Cost of goods sold 99,653 73,738
Research and development 30,568 22,570
Marketing and selling 11,437 8,732
General and administrative 5,219 4,777
Other operating expenses 527 611
--------- ---------
Total operating costs and expenses 147,404 110,428
--------- ---------
Income from operations 16,060 9,307
Other (expense) income:
Interest income 722 1,624
Interest expense (5,137) (4,456)
Other (expense) income, net (55) 44
--------- ---------
Income before income taxes 11,590 6,519
Income tax expense (NOTE 6) 183 34
--------- ---------
Net income $ 11,407 $ 6,485
========= =========
Net income per share (NOTE 2):
Basic $ 0.06 $ 0.04
Diluted $ 0.06 $ 0.04
Weighted average shares outstanding used in per share calculation:
Basic 184,363 168,551
Diluted 219,238 173,199
See accompanying Notes to Condensed Consolidated Financial Statements
RF MICRO DEVICES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)
SIX MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
2003 2002
---------------- ---------------
Total revenue $ 294,985 $ 223,677
Operating costs and expenses:
Cost of goods sold 189,936 136,242
Research and development 61,903 45,621
Marketing and selling 21,734 17,146
General and administrative 9,771 8,977
Other operating expenses 1,054 1,353
--------- ---------
Total operating costs and expenses 284,398 209,339
--------- ---------
Income from operations 10,587 14,338
Other (expense) income:
Interest income 1,599 3,492
Interest expense (8,615) (8,952)
Other income (expense), net 84 27
--------- ---------
Income before income taxes 3,655 8,905
--------- ---------
Income tax expense (NOTE 6) 332 71
--------- ---------
Net income $ 3,323 $ 8,834
========= =========
Net income per share (NOTE 2):
Basic $ 0.02 $ 0.05
Diluted $ 0.02 $ 0.05
Weighted average shares outstanding used in per share calculation:
Basic 184,271 168,246
Diluted 189,041 173,866
See accompanying Notes to Condensed Consolidated Financial Statements
RF MICRO DEVICES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
SIX MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
2003 2002
-------------- --------------
Cash flows from operating activities:
Net income $ 3,323 $ 8,834
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation 28,024 19,655
Amortization 12,311 4,975
Loss on disposal of assets, net 142 861
Other 169 (102)
Changes in operating assets and liabilities:
Accounts receivable, net (13,883) (6,423)
Inventories 5,130 (22,555)
Recoverable income taxes 6,330 4,457
Other assets (1,465) 973
Accounts payable and accrued liabilities 6,451 8,510
Other liabilities 3,250 41
--------- ---------
Net cash provided by operating activities 49,782 19,226
Cash flows from investing activities:
Purchase of capital equipment/leasehold improvements (17,603) (26,069)
Proceeds from maturities of securities available for sale 92,180 172,987
Purchase of securities available for sale (113,832) (152,131)
Purchase of non-public investment (4,000) --
--------- ---------
Net cash used in investing activities (43,255) (5,213)
Cash flows from financing activities:
Proceeds from exercise of options 2,692 2,652
Proceeds from 1.50% convertible subordinated notes, net 224,781 --
Repurchase of 3.75% convertible subordinated notes (200,000) --
Repayment of capital lease obligations (427) (2,153)
--------- ---------
Net cash provided by financing activities 27,046 499
--------- ---------
Net increase in cash and cash equivalents 33,573 14,512
Effect of exchange rate changes on cash 39 22
Cash and cash equivalents at the beginning of the period 164,422 157,648
--------- ---------
Cash and cash equivalents at the end of the period $ 198,034 $ 172,182
========= =========
Non-cash investing and financing activities:
Issuance of restricted stock $ 3,542 $ --
Non-cash stock purchase for assets 842 --
Other comprehensive income (loss), net of tax 129 (2,561)
See accompanying Notes to Condensed Consolidated Financial Statements.
RF MICRO DEVICES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
The accompanying condensed consolidated financial statements of RF Micro
Devices, Inc. and Subsidiaries (the Company) have been prepared in conformity
with accounting principles generally accepted in the United States. The
preparation of these financial statements requires management to make estimates
and assumptions, which could differ materially from actual results. In addition,
certain information or footnote disclosures normally included in financial
statements prepared in accordance with accounting principles generally accepted
in the United States have been condensed, or omitted, pursuant to the rules and
regulations of the Securities and Exchange Commission. In the opinion of
management, the financial statements include all adjustments (which are of a
normal and recurring nature) necessary for the fair presentation of the results
of the interim periods presented. For comparative purposes, certain fiscal 2003
amounts have been reclassified to conform to fiscal 2004 presentation. These
reclassifications had no effect on net income or shareholders' equity as
previously stated. The results of operations for interim periods are not
necessarily indicative of the results that may be expected for a full year.
These condensed consolidated financial statements should be read in conjunction
with the Company's audited consolidated financial statements and notes thereto
included in the Company's Annual Report on Form 10-K for the year ended March
31, 2003.
The condensed consolidated financial statements include the accounts of the
Company and its wholly-owned subsidiaries. All significant intercompany accounts
and transactions have been eliminated in consolidation.
The Company uses a 52- or 53-week fiscal year ending on the Saturday closest to
March 31 of each year. The first fiscal quarter of each year ends on the
Saturday closest to June 30, the second fiscal quarter of each year ends on the
Saturday closest to September 30 and the third fiscal quarter of each year ends
on the Saturday closest to December 31; however, in this report the Company's
fiscal year is described as ending on March 31 and the first, second, and third
quarters of each fiscal year are described as ending June 30, September 30 and
December 31, respectively.
STOCK-BASED COMPENSATION
The Company accounts for employee stock options and employee restricted stock in
accordance with Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees" (APB 25). Under APB 25, no compensation expense is
recognized for stock options or restricted stock issued to employees with
exercise prices or share prices at or above quoted market value. For stock
options or restricted shares granted at exercise prices below quoted market
value, the Company records deferred compensation expense for the difference
between the price of the shares and the market value. Deferred compensation
expense is amortized ratably over the vesting period of the related options or
shares of restricted stock.
Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" (SFAS 123) provides an alternative to APB 25 in accounting for
stock-based compensation issued to employees. SFAS 123 provides for a fair value
based method of accounting for employee stock options and similar equity
instruments. Companies that continue to account for stock-based compensation
arrangements under APB 25 are required by SFAS 123 to disclose the pro forma
effect on net (loss) income and net (loss) income per share as if the fair value
based method prescribed by SFAS 123 had been applied. The Company has continued
to account for stock-based compensation using the provisions of APB 25 and
presents the information required by SFAS 123 as amended by Statement of
Financial Accounting Standards No. 148, "Accounting for Stock-Based
Compensation-Transition and Disclosure" (SFAS 148).
RF MICRO DEVICES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)
1. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
PRO FORMA DISCLOSURES
Pro forma information regarding net (loss) income and net (loss) income per
share is required by SFAS 123 as amended by SFAS 148, and has been determined as
if the Company accounted for its employee stock options using the fair value
method of SFAS 123 as amended by SFAS 148.
The Company's pro forma information follows (in thousands, except per share
data):
THREE MONTHS ENDED SIX MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
----------------------- -----------------------
2003 2002 2003 2002
-------- ---------- --------- ----------
Net income, as reported $ 11,407 $ 6,485 $ 3,323 $ 8,834
Non-cash stock-based compensation included
in net income 2,140 1,018 3,891 2,035
Pro forma stock-based compensation cost (17,825) (22,072) (34,920) (45,154)
---------- ----------- --------- ----------
Pro forma net (loss) $ (4,278) $ (14,569) $(27,706) $(34,285)
========== =========== ========= ==========
Basic net income per share, as reported $ 0.06 $ 0.04 $ 0.02 $ 0.05
========== =========== ========= ==========
Diluted net income per share, as reported $ 0.06 $ 0.04 $ 0.02 $ 0.05
========== =========== ========= ==========
Pro forma basic net (loss) per share $ (0.02) $ (0.09) $ (0.15) $ (0.20)
========== =========== ========= ==========
Pro forma diluted net (loss) per share $ (0.02) $ (0.09) $ (0.15) $ (0.20)
========== =========== ========= ==========
RF MICRO DEVICES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)
2. NET INCOME PER SHARE
The following table sets forth a reconciliation of the numerators and
denominators in the computation of basic and diluted net income per share (in
thousands, except per share data):
THREE MONTHS ENDED SIX MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
---------------------------- -----------------------------
2003 2002 2003 2002
------------ ------------ ------------- ------------
Numerator for basic and diluted net income per
share:
Net income available to common shareholders -
Numerator for basic $ 11,407 $ 6,485 $ 3,323 $ 8,834
Plus: Income impact of assumed conversions
Interest on 1.50% convertible notes 990 -- -- --
-------- -------- -------- --------
Net income plus assumed conversion - Numerator
for diluted $ 12,397 $ 6,485 $ 3,323 $ 8,834
======== ======== ======== ========
Denominator for basic net income per share -
weighted average shares 184,363 168,551 184,271 168,246
Effect of dilutive securities:
Stock options 5,783 4,648 4,770 5,620
Assumed conversion 1.50%
convertible 29,092 -- -- --
notes
-------- -------- -------- --------
Denominator for diluted net income per share -
adjusted weighted average shares and assumed
conversions 219,238 173,199 189,041 173,866
======== ======== ======== ========
Basic net income per share $ 0.06 $ 0.04 $ 0.02 $ 0.05
======== ======== ======== ========
Diluted net income per share $ 0.06 $ 0.04 $ 0.02 $ 0.05
======== ======== ======== ========
In the computation of diluted net income per share for the three months ended
September 30, 2003 and 2002 and the six months ended September 30, 2003 and
2002, outstanding stock options to purchase approximately 13.2 million shares,
13.7 million shares, 15.0 million shares and 11.3 million shares, respectively,
were excluded because the exercise price of the options was greater than the
average market price of the underlying common stock and the effect of their
inclusion would have been anti-dilutive. The computation of diluted net income
per share for three months and six months ended September 30, 2003 and 2002
similarly did not assume the conversion of the Company's 3.75% convertible
subordinated notes due 2005 because the inclusion would have been anti-dilutive.
The computation assumed the conversion of the Company's 1.50% convertible
subordinated notes due 2010 for the three months ended September 30, 2003, but
did not assume the conversion of such notes for the six months ended September
30, 2003 because the inclusion would have been anti-dilutive. The 3.75% notes
are convertible at a price of $45.085 per share, and the closing price of the
Company's common stock on the date it committed to sell the notes was $35.50.
The 1.50% notes are convertible at a price of $7.63 per share, and the closing
price of the Company's common stock on the date it committed to sell the notes
was $5.78.
RF MICRO DEVICES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)
3. INVENTORIES
Inventories are stated at the lower of cost or market determined using the
average cost method. The components of inventories are as follows (in
thousands):
SEPTEMBER 30, MARCH 31,
2003 2003
-------- --------
Raw materials $ 14,166 $ 15,942
Work in process 28,799 30,174
Finished goods 27,714 29,672
-------- --------
70,679 75,788
Inventory reserve (18,222) (18,007)
-------- --------
Total inventories $ 52,457 $ 57,781
======== ========
4. LONG-TERM DEBT
In July 2003, the Company completed the private placement of $230.0 million
aggregate principal amount of 1.50% convertible subordinated notes due 2010. The
notes are convertible into a total of approximately 30.1 million shares of the
Company's common stock at an approximate conversion price of $7.63 per share.
The trading value of the Company's stock on the commitment date, June 25, 2003,
was $5.78 per share. 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, which are being amortized as interest expense over the
term of the notes based on the effective interest method. During the second
quarter, the Company used a portion of the proceeds to repurchase $200.0 million
of the $300.0 million aggregate principal amount of its 3.75% convertible
subordinated notes due 2005. The Company recorded a non-cash charge of $2.6
million related to the repurchase for unaccreted discounts and unamortized
issuance costs in the second quarter of fiscal 2004.
The Company's 3.75% convertible subordinated notes had a fair value of $99.5
million and the 1.50% convertible subordinated notes had a fair value of $316.5
million as of September 30, 2003, on the Private Offerings, Resale and Trading
Through Automated Linkages (PORTAL) Market.
5. OTHER COMPREHENSIVE INCOME
Accumulated other comprehensive income for the Company consists of accumulated
unrealized (losses) and gains on marketable securities, foreign currency
translation adjustments and the change in fair value of a cash flow hedge
related to the Company's synthetic lease. This amount is included as a separate
component of shareholders' equity. The components of comprehensive income, net
of tax, are as follows for the periods presented (in thousands):
THREE MONTHS ENDED SIX MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
--------------------------- ---------------------------
2003 2002 2003 2002
-------- -------- -------- --------
Net income $ 11,407 $ 6,485 $ 3,323 $ 8,834
Comprehensive income, net of tax
Change in fair value of cash flow hedge -- (1,167) -- (2,273)
Unrealized gain (loss) on marketable securities 113 (396) 75 (326)
Foreign currency (6) 40 54 38
Comprehensive income, net of tax $ 11,514 $ 4,962 $ 3,452 $ 6,273
======== ======== ======== ========
RF MICRO DEVICES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)
6. INCOME TAXES
Income tax expense for the second quarter of fiscal 2004 was $0.2 million and
$0.3 million for the three and six months ended September 30, 2003, representing
foreign income taxes on international operations. The effective combined
domestic income tax rate was 0% for both the second quarter of fiscal 2004 and
the second quarter of fiscal 2003. The Company's overall tax rate for the second
quarter of fiscal 2004 and 2003 differed from the statutory rate due to
adjustments to the valuation allowance primarily related to the non-recognition
of the US tax benefits on the domestic net operating losses and tax credits,
rate differences on foreign transactions, and other differences between book and
tax treatment of certain expenditures.
At September 30, 2003, the Company had outstanding net operating loss
carryforwards (NOLs) for federal domestic tax purposes of approximately $70.7
million, which will expire in years 2022 -2025, if unused, and state losses of
approximately $87.7 million, which will expire in years 2009-2025, if unused.
Included in the amounts above are certain NOLs and other tax attribute assets
acquired in conjunction with the close of the Company's acquisition of Resonext
Communications, Inc. in December 2002. The utilization of acquired assets may be
subject to certain annual limitations as required under Internal Revenue Code
Section 382. In accordance with the Statement of Financial Accounting Standards
No. 109, "Accounting for Income Taxes," a valuation allowance of $20.7 million
related to domestic operating losses has been established because it is more
likely than not that some portion of the deferred tax assets will not be
realized. The Company considered this review, along with the timing of the
reversal of the Company's temporary differences and the expiration dates of the
NOLs, in reaching the decision.
7. COMMITMENTS
JAZZ SEMICONDUCTOR STRATEGIC RELATIONSHIP
The Company entered into a strategic relationship with Jazz Semiconductor, Inc.
(Jazz) in October 2002. The Company will collaborate with Jazz on joint process
development and the optimization of these processes for fabrication of
next-generation silicon radio frequency integrated circuits (RFICs). As part of
its strategic relationship with Jazz, the Company agreed to invest approximately
$60.0 million in Jazz, $30.0 million of which was invested in October 2002 and
$30.0 million of which is payable in the third quarter of fiscal 2004. The $30.0
million payable is recorded in other current liabilities net of the effective
discount rate of one year LIBOR plus 1.0%.
STRATEGIC ALLIANCE WITH AGERE
The Company entered into a strategic alliance with Agere Systems Inc. (Agere) in
May 2001, pursuant to which the Company agreed to invest approximately $58.0
million over two years to upgrade manufacturing clean room space and purchase
semiconductor manufacturing equipment to be deployed within Agere's Orlando,
Florida manufacturing facility, of which $16.4 million had been invested as of
September 30, 2003. On January 23, 2002, Agere announced that it was seeking a
buyer for its Orlando wafer fabrication operation. As a result of this
announcement and the related uncertainty concerning the future of Agere's
Orlando facility, the parties suspended further performance under the
agreements. The Company does not intend to make any additional investments in
equipment under this arrangement. The Company recently contacted and met with
representatives of Agere in order to attempt to resolve all remaining issues
between the parties under the alliance documents. Based on the preliminary
nature of these discussions, the Company currently cannot predict the outcome or
financial or other effects of this matter.
RF MICRO DEVICES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)
8. IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS
In January 2003, the Financial Accounting Standards Board (FASB) issued
Interpretation No. 46 (FIN 46), "Consolidation of Variable Interest Entities."
FIN 46 requires an investor with a majority of the variable interests (primary
beneficiary) in a variable interest entity (VIE) to consolidate the entity and
also requires majority and significant variable interest investors to provide
certain disclosures. A VIE is an entity in which the voting equity investors do
not have a controlling interest, or the equity investment at risk is
insufficient to finance the entity's activities without receiving additional
subordinated financial support from other parties. Effective October 9, 2003,
the FASB issued a Staff Position (FSP) FIN 46-6 that defers the application of
this interpretation to interests in potential variable interest entities, if the
VIE was created prior to February 1, 2003 and the Company has not issued
financial statements reporting interests in variable interest entities in
accordance with FIN 46 until the end of periods ending after December 15, 2003.
For the promotion of strategic business objectives, the Company invests in and
enters into arrangements with entities which may be VIEs. The Company is
currently performing a review of its investments in both non-marketable and
marketable securities as well as other arrangements to determine whether the
Company is the primary beneficiary of any of the related entities. To date, the
review has not identified any entity that would require consolidation. The
Company expects to complete the review in the third quarter of fiscal 2004 as
required by FIN 46-6. Provided that the Company is not determined to be the
primary beneficiary, the maximum exposure to losses related to any entity that
may be determined to be a VIE is limited to the carrying amount of the
investment in the entity.
In April 2003, the FASB issued Statement of Financial Accounting Standards No.
149, "Amendment of Statement 133 on Derivative Instruments and Hedging
Activities" (SFAS 149). SFAS 149 amends Statement of Financial Accounting
Standards No. 133, "Accounting for Derivative and Hedging Activities" (SFAS
133), to provide more consistent reporting of contracts as either freestanding
derivative instruments subject to SFAS 133 in their entirety, or as hybrid
instruments with debt host contracts and embedded derivative features. SFAS 149
is effective for contracts entered into or modified after June 30, 2003, and
hedging relationships designated after June 30, 2003. The Company adopted SFAS
149 for contracts entered into or modified after June 30, 2003. Adoption of SFAS
149 did not have a significant impact on the Company's consolidated financial
position, results of operations or cash flows.
In May 2003, the FASB issued Statement of Financial Accounting Standards No.
150, "Accounting for Certain Financial Instruments with Characteristics of both
Liabilities and Equity" (SFAS 150). SFAS 150 establishes standards for
classifying and measuring as liabilities certain financial instruments that
embody obligations of the issuer and have characteristics of both liabilities
and equity. SFAS 150 is effective immediately to instruments entered into or
modified after May 31, 2003 and for all other instruments that exist as of the
beginning of the first interim financial reporting period beginning after June
15, 2003. The Company adopted SFAS 150 during the first quarter of fiscal 2004.
Adoption of SFAS 150 did not have a significant impact on the Company's
consolidated financial position, results of operations or cash flows.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements that
relate to our plans, objectives, estimates and goals. Words such as "expect,"
"anticipate," "intend," "plan," "believe," and "estimate," and variations of
such words and similar expressions, identify such forward-looking statements.
Our business is subject to numerous risks and uncertainties, including the
following:
o Variability in operating results;
o The rate of growth and development of wireless markets;
o The risks associated with the operation of our molecular beam epitaxy
facility, the operation of our test and tape and reel facilities, both
foreign and domestic, and the operation of our wafer fabrication
facilities;
o Our ability to manage rapid growth and to attract and retain skilled
personnel;
o Variability in production yields, raw material costs and availability;
o Dependence on a limited number of customers;
o Dependence on our gallium arsenide (GaAs) heterojunction bipolar
transistor (HBT) products;
o Our ability to reduce costs and improve margins by converting our
second four-inch GaAs HBT wafer fabrication facility into a six-inch
facility, improving yields, implementing innovative technologies and
increasing capacity utilization;
o Dependence on third parties;
o Our ability to bring new products to market in response to market
shifts and use technological innovation to lead the industry in
time-to-market for our products;
o Currency fluctuations, tariffs, trade barriers, taxes and export
license requirements associated with our foreign operations; and
o Our ability to integrate acquired companies, including the risk that
we may not realize expected synergies from our business combinations.
These and other risks and uncertainties, which are described in more detail in
our most recent Annual Report on Form 10-K filed with the Securities and
Exchange Commission, could cause the actual results and developments to be
materially different from those expressed or implied by any of these
forward-looking statements.
RESULTS OF OPERATIONS
The following table sets forth our unaudited condensed consolidated statement of
operations data expressed as a percentage of total revenue for the periods
indicated:
THREE MONTHS ENDED SIX MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
2003 2002 2003 2002
-------------- -------------- -------------- -------------
Revenue 100.0% 100.0% 100.0% 100.0%
Operating costs and expenses:
Cost of goods sold 61.0 61.6 64.3 60.9
Research and development 18.7 18.8 21.0 20.4
Marketing and selling 7.0 7.3 7.4 7.7
General and administrative 3.2 4.0 3.3 4.0
Other operating expenses 0.3 0.5 0.4 0.6
-------------- -------------- -------------- -------------
Total operating costs and expenses 90.2 92.2 96.4 93.6
-------------- -------------- -------------- -------------
Income from operations 9.8 7.8 3.6 6.4
Other (expense) income:
Interest income 0.4 1.3 0.5 1.6
Interest expense (3.1) (3.7) (2.9) (4.0)
Other, net - - - -
-------------- -------------- -------------- -------------
Income before income taxes 7.1 5.4 1.2 4.0
Income tax expense 0.1 - 0.1 -
-------------- -------------- -------------- -------------
Net income 7.0% 5.4% 1.1% 4.0%
============== ============== ============== =============
REVENUE
Revenue for the second quarter of fiscal 2004 increased 36.5% to $163.5 million,
compared to $119.7 million for the same quarter in fiscal 2003. For the six
months ended September 30, 2003, revenue increased 31.9% to $295.0 million,
compared to $223.7 million for the same period in fiscal 2003. The increases
year over year were due primarily to strong growth in demand from handset
manufacturers and market share gains for our power amplifier products. Revenues
increased year over year despite continued pressure on average selling prices.
International shipments were $132.3 million and accounted for 80.9% of revenue
in the second quarter of fiscal 2004, compared to $94.0 million, or 78.5% of
revenue, in the second quarter of fiscal 2003. For the six months ended
September 30, 2003 international shipments were $241.5 million, or 81.9% of
revenue, up from $168.9, or 75.5% of revenue, for the six months ended September
30, 2002. The international sales increase was primarily attributable to sales
to customers located in Asia which totaled $92.3 million, or 56.5% of revenue,
for the second quarter of fiscal 2004, compared to $62.3 million, or 52.1% of
revenue, for the second quarter of fiscal 2003. Year-to-date shipments to Asia
totaled $161.1 million, or 54.6% of revenue, in fiscal 2004 and $108.0 million,
or 48.3% of revenue, in fiscal 2003.
GROSS PROFIT
Gross profit for the three months ended September 30, 2003 increased to $63.8
million, or 39.0% of revenue, compared to $46.0 million, or 38.4% of revenue, in
the second quarter of the prior year. For the six months ended September 30,
2003, gross profit increased to $105.0 million, or 35.7% of revenue, compared to
$87.4 million, or 39.1% of revenue, for the same period ended September 30,
2002. The gross profit percentage increase in the second quarter of fiscal 2004
compared to the same quarter in fiscal 2003 was primarily due to our cost
reduction efforts consisting of test and assembly yield improvements, material
cost reductions and capacity utilization. The gross profit percentage decreased
for the six months ended September 30, 2003 compared to the six months ended
September 30, 2002 as we continue to shift product mix from MMICs to modules,
which have a lower overall average gross profit than MMICs. Module sales for the
six months ended September 30, 2003 represented 75% of our revenue compared to
50% for the six months ended September 30, 2002. Our year to date gross profit
percentage was partially offset by the cost reduction efforts described below.
We have historically experienced significant fluctuations in gross profit
margins and, consequently, our operating results, and we expect such
fluctuations to continue. We expect continued declines in average selling prices
to pressure gross profit margin. However, we have multiple cost reduction
efforts underway intended to improve our gross profit margin, including
conversion of our second four-inch GaAs HBT wafer fabrication facility into a
six-inch facility, utilizing our strategic relationship with Jazz Semiconductor
(Jazz) to obtain a committed, lower-cost source of supply for silicon wafers,
achieving higher levels of product integration, successfully implementing test
yield and assembly improvement plans, lowering assembly and other supply chain
costs, and increasing our capacity utilization.
RESEARCH AND DEVELOPMENT
Research and development expenses in the second quarter of fiscal 2004 were
$30.6 million, or 18.7% of revenue, compared to $22.6 million, or 18.8% of
revenue, in the second quarter of fiscal 2003. For the six months ended
September 30, 2003, research and development expenses were $61.9 million, or
21.0% of revenue, compared to $45.6 million, or 20.4% of revenue, for the same
period in fiscal 2003. The increase year over year was primarily attributable to
increased headcount and related personnel expenses including salaries, benefits,
and equipment. During the end of the third quarter of fiscal 2003, we merged
with Resonext Communications, Inc., which contributed to the increased
headcount, related personnel expenses and additional amortization expense from
the acquired intangible assets. The year over year investment increases are also
focused on product innovation related to our POLARIS (TM) family of cellular
transceivers, wireless local area networks (WLAN), next generation power
amplifiers, global positioning system (GPS) and infrastructure products. We plan
to continue to make investments in research and development and expect that such
expenses will continue to increase in absolute dollars in future periods.
MARKETING AND SELLING
Marketing and selling expenses for the second quarter of fiscal 2004 were $11.4
million, or 7.0% of revenue, compared to $8.7 million, or 7.3% of revenue, for
the second quarter of fiscal 2003. For the six months ended September 30, 2003,
marketing and selling expenses increased to $21.7 million, or 7.4% of revenue,
compared to $17.1 million, or 7.7% of revenue, for the six months ended
September 30, 2002. The absolute dollar increase year over year in fiscal 2004
compared to fiscal 2003 was primarily attributable to increased headcount and
related personnel expenses including salaries, benefits, and equipment. The
Resonext merger contributed to the increased headcount, related personnel
expenses and additional amortization expense from the acquired intangible
assets. The year over year increases were partially offset by a decrease in
commission expense in fiscal 2004 compared to fiscal 2003, which is attributable
to shifts in revenue from third party commission-based accounts to in-house
accounts. We plan to continue to make investments in marketing and selling and
expect that such expenses will continue to increase in absolute dollars in
future periods.
GENERAL AND ADMINISTRATIVE
General and administrative expenses for the quarter ended September 30, 2003
were $5.2 million, or 3.2% of revenue, compared to $4.8 million, or 4.0% of
revenue, for the quarter ended September 30, 2002. For the six months ended
September 30, 2003, general and administrative expenses were $9.8 million, or
3.3% of revenue, compared to $9.0 million, or 4.0% of revenue, in the same
period last fiscal year. The year over year increases in absolute dollars were
primarily due to bank charges for letters of credit expenses related to our
expanded business in Asian markets, directors' compensation expenses related to
the appointment of two new board members, and increased legal and audit fees
related to our compliance with the Sarbanes-Oxley Act of 2002. We expect that
general and administrative expenses will continue to increase in absolute
dollars in future periods.
OTHER OPERATING EXPENSE
Other operating expense for the second quarter of fiscal 2004 was $0.5 million,
compared to $0.6 million in the prior year. For the six months ended September
30, 2003, other operating expense was $1.1 million, compared to $1.4 million for
the same period in fiscal 2002. Other operating expense in the second quarter of
fiscal 2004 and for the six months ended September 30, 2003 was comprised of
depreciation expense for assets held and used related to the Agere facility.
Other operating expense in the corresponding periods of fiscal 2003 was
comprised of start-up costs associated with our test and tape and reel facility
in Beijing, China. The operating costs of the Beijing facility transitioned to
cost of goods sold during the second quarter of fiscal 2003 once the facility
was qualified for production and economic value was obtained.
The Resonext-related acquired in-process research and development was charged to
expense in accordance with SFAS 141 in fiscal 2003. SFAS 141 specifies that the
portion of the purchase price assigned to acquired intangible assets to be used
in a particular research and development project that have no alternative future
use shall be charged to expense at the merger date. The in-process research and
development projects were related to first- and second-generation products for
802.11a/b/g applications. The first-generation product is a two-chip combination
of a transceiver and baseband/media access controller (MAC) chip that supports
the 802.11 a/b/g protocols, and the fair value of the in-process research and
development associated with this project was estimated to be $6.2 million. The
second-generation product is a two-chip combination of a transceiver with a
baseband/MAC chip that supports the 802.11 a/b/g protocols and allows for
variable frequencies, and the fair value of the in-process research and
development associated with this project was estimated to be $4.3 million. The
fair value of the acquired in-process research and development was estimated
based on an analysis of the expected costs to develop the purchased in-process
research and development into a commercially viable product, and cash flows
resulting from the sale of the products developed as the result of the
in-process research and development. The projected net cash flows obtained
through this analysis were discounted using a present value factor of 19%.
The first generation product is expected to be completed in the first quarter of
fiscal 2005. The estimated cost to complete the first generation project is
approximately $4.0 to $5.0 million as of September 30, 2003. The second
generation product efforts have been discontinued, and, accordingly, no
additional expenditures will occur for this project. The second generation
product effort was discontinued due to changing market requirements and a new
broader product development effort is under way. The new product development
effort builds off of the first generation products, and we estimate an
additional investment of $10.0 million to $11.0 million as of September 30,
2003. We expect to complete the new project by the first quarter 2005.
INTEREST INCOME
For the quarter ended September 30, 2003, interest income was $0.7 million,
compared to $1.6 million for the same quarter for the prior year. Interest
income for the six months ended September 30, 2003 and 2002 was $1.6 million and
$3.5 million, respectively. Interest income decreased due to lower prevailing
interest rates driven by the Federal Reserve cuts to the federal funds rate and
lower cash and investment balances.
INTEREST EXPENSE
Interest expense was $5.1 million for the three months ended September 30, 2003,
compared to $4.5 million for the second quarter of the prior year. Interest
expense for the six months ended September 30, 2003 and 2002 was $8.6 million
and $9.0 million, respectively. The fiscal 2004 second quarter increase over
fiscal 2003 second quarter resulted from a non-cash charge for unaccreted
discounts and unamortized issuance cost of $2.6 million related to the
repurchase of $200.0 million principal amount of our 3.75% convertible
subordinated notes. The retirement of an interest rate swap arrangement in
fiscal 2003 offset the fiscal 2004 second quarter increase and decreased year to
date interest expense for the six months ended September 30, 2003 compared to
the six months ended September 30, 2002.
INCOME TAX
Income tax expense for the second quarter of fiscal 2004 was $0.2 million
representing foreign income taxes on international operations. The effective
combined domestic income tax rate was 0% for the second quarter of fiscal 2004
and 0% for the second quarter of fiscal 2003. Our effective tax rate was 9.1%
for the six months ended September 30, 2003 compared to a 0.8% effective tax
benefit for the same period in fiscal 2003. Our overall tax rate for the three
months and six months ended September 30, 2003 and 2002 differed from the
statutory rate due to adjustments to the valuation allowance primarily related
to the non-recognition of the US tax benefits on the domestic net operating
losses and tax credits, rate differences on foreign transactions, and other
differences between book and tax treatment of certain expenditures.
At September 30, 2003, we had outstanding net operating loss carryforwards
(NOLs) for federal domestic tax purposes of approximately $70.7 million, which
will expire in years 2022 -2025, if unused, and state losses of approximately
$87.7 million, which will expire in years 2009-2025, if unused. Included in the
amounts above are certain NOL and other tax attribute assets acquired in
conjunction with the close of our acquisition of Resonext Communications, Inc.
The utilization of acquired assets may be subject to certain annual limitations
as required under Internal Revenue Code Section 382. In accordance with the
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes," a valuation allowance of $20.7 million related to domestic operating
losses has been established because it is more likely than not that some portion
of the deferred tax assets will not be realized. We considered this review, the
timing of the reversal of our temporary differences and the expiration dates of
the NOLs in reaching our conclusion.
LIQUIDITY AND CAPITAL RESOURCES
We have funded our operations to date through sales of equity and debt
securities, bank borrowings, capital equipment leases and cash from operations.
Through public and Rule 144A securities offerings, we have raised approximately
$687.0 million, net of offering expenses. As of September 30, 2003, our working
capital was $367.2 million, including $198.0 million in cash and cash
equivalents, compared to working capital at March 31, 2003 of $315.1 million.
Operating activities for the first six months of fiscal 2004 generated $49.8
million in cash, compared to $19.2 million in the first six months of fiscal
2003. This year over year increase was primarily attributable to changes in
inventory as cash used decreased $27.7 million. Cash used in accounts receivable
increased to $13.9 million for the first six months of fiscal 2004, compared to
$6.4 million in the first six months of fiscal 2003 due to an increase in
revenue, which partially offset the inventory increase. Adjustments to reconcile
net income for non-cash operating items increased cash provided from operating
activities by $15.3 million year over year due primarily to increased
depreciation and amortization expense in fiscal 2004.
Net cash used in investing activities for the six months ended September 30,
2003 was $43.3 million, compared to $5.2 million in the prior year. The year
over year increase in cash used was primarily attributable to lower proceeds
from maturities of securities available-for-sale of $92.2 million compared to
$173.0 million in fiscal 2003.
Net cash provided by financing activities for the six months ended September 30,
2003 was $27.0 million, compared to cash provided of $0.5 million for the six
months ended September 30, 2002. The year over year increase in cash provided
was due to 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. The net proceeds from the 1.50%
offering were offset by the repurchase of $200.0 million principal amount of our
$300.0 million 3.75% convertible subordinated notes due 2005.
COMMITMENTS
STRATEGIC RELATIONSHIP WITH JAZZ SEMICONDUCTOR. We entered into a strategic
relationship with Jazz Semiconductor (Jazz) in October 2002, pursuant to which
we agreed to invest approximately $60.0 million in Jazz. We transferred $30.0
million in cash to Jazz in the third quarter of fiscal 2003 and paid the
remaining $30.0 million in the third quarter of fiscal 2004.
STRATEGIC ALLIANCE WITH AGERE SYSTEMS, INC. We entered into a strategic alliance
with Agere Systems Inc. (Agere) in May 2001, pursuant to which we agreed to
invest approximately $58.0 million over two years to upgrade manufacturing clean
room space and purchase semiconductor manufacturing equipment to be deployed
within Agere's Orlando, Florida manufacturing facility, of which $16.4 million
had been invested as of September 30, 2003. This alliance was designed to
provide us a guaranteed source of supply and favorable pricing of silicon
wafers. On January 23, 2002, Agere announced that it was seeking a buyer for its
Orlando wafer fabrication operation. As a result of this announcement and the
related uncertainty concerning the future of Agere's Orlando facility, the
parties suspended further performance under the agreement. We do not intend to
make any additional investments in equipment under this arrangement. We recently
contacted and met with representatives of Agere in order to attempt to resolve
all remaining issues between the parties under the alliance documents. Based on
the preliminary nature of these discussions, we currently cannot predict the
outcome or financial or other effects of this matter.
CONVERTIBLE DEBT In July 2003, we completed the private placement of $230.0
million aggregate principal amount of 1.50% convertible subordinated notes due
2010. The notes are convertible into a total of approximately 30.1 million
shares of our common stock at an approximate conversion price of $7.63 per
share. The trading value of our stock on the commitment date, June 25, 2003, was
$5.78 per share. The net proceeds of the offering were approximately $224.7
million. Of that amount, we used $200.0 million to repurchase a portion of our
3.75% convertible subordinated notes due 2005, and we intend to use the
remainder for general corporate purposes, including capital expenditures and
working capital. In fiscal 2004, we expect to pay interest of $1.7 million on
these notes.
During fiscal 2001, we completed the private placement of $300.0 million
aggregate principal amount of 3.75% convertible subordinated notes due 2005. The
net proceeds from this offering were $291.3 million. During the second quarter
of fiscal 2004, we repurchased $200.0 million of the $300.0 million aggregate
principal amount of 3.75% convertible subordinated notes due 2005 with proceeds
from the offering of our 1.50% convertible subordinated notes due 2010. As of
September 30, 2003, we expect to pay interest of $1.9 million on the remaining
$100.0 million convertible subordinated notes, which has not been paid. During
fiscal 2004, we have already paid $4.9 million related to the repurchased notes
and semi-annual payment.
CAPITAL COMMITMENTS At September 30, 2003, we had long-term capital commitments
of approximately $7.8 million, consisting of approximately $5.6 million for
equipment related to the six-inch wafer conversion project, approximately $0.6
million for equipment in our test and tape and reel facilities in Greensboro,
North Carolina and Beijing, China, and the remainder for general corporate
requirements.
FUTURE SOURCES OF FUNDING We expect to fund our commitments through a
combination of cash on hand, capital leases and other forms of financing. 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 and demand for our products, volume pricing concessions,
capital improvements to new and existing facilities, technological advances and
our relationships with suppliers and customers. We believe our cash requirements
will be adequately met from our most recent convertible note offering and cash
from operations during fiscal 2004. However, if existing resources and cash from
operations are not sufficient to meet our future requirements, or if we perceive
favorable opportunities, we may seek additional debt or equity financing or
additional credit facilities. We filed a $500.0 million shelf registration
statement providing for the offering from time to time of debt securities,
common stock, preferred stock, depositary shares, warrants and subscription
rights. We do not have any current plans to issue any securities under this
registration statement. We cannot be sure that any additional 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.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company's market risk has not changed significantly for the risks disclosed
in Item 7A of the Company's Annual Report on Form 10-K for the fiscal year ended
March 31, 2003.
ITEM 4. CONTROL AND PROCEDURES
As of the end of the period covered by this report, the Company's Chief
Executive Officer and the Chief Financial Officer evaluated the effectiveness of
the Company's disclosure controls and procedures in accordance with Rule 13a-15
under the Exchange Act. Based on their evaluation, the Chief Executive Officer
and the Chief Financial Officer concluded that the Company's disclosure controls
and procedures enable the Company to record, process, summarize and report in a
timely manner the information that the Company is required to disclose in its
Exchange Act reports.
There were no changes in the Company's internal control over financial reporting
that occurred during the period covered by this report that have materially
affected, or are reasonably likely to materially affect, the Company's internal
control over financial reporting.
PART II - OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
(c) Recent Sales of Unregistered Securities
In July, 2003, we sold $230.0 million principal amount of 1.50% convertible
subordinated notes due 2010. The notes are convertible into approximately 30.1
million shares of our common stock at a rate of 131.0685 shares of common stock
per $1,000 principal amount of notes. The notes were sold to initial purchasers,
who in turn sold them to qualified institutional buyers, in a private placement
pursuant to Section 4(2) of the Securities Act of 1933, as amended, and may be
resold to qualified institutional buyers on the PORTAL market. We filed a
registration statement on Form S-3 relating to the resale of the notes and the
common stock into which the notes are convertible with the Securities and
Exchange Commission on August 22, 2003.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Our annual meeting of shareholders was held on July 22, 2003. At the meeting,
our shareholders elected eight directors for one-year terms and until their
successors are duly elected and qualified, approved the adoption of the 2003
Stock Incentive Plan and ratified the appointment of Ernst & Young LLP as the
Company's independent auditors for the fiscal year ending March 31, 2004. Votes
cast by our shareholders at the meeting were as follows:
NOMINEES FOR DIRECTOR SHARES VOTED IN FAVOR SHARES WITHHELD
- -------------------------------- --------------------- ---------------
Robert A. Bruggeworth 150,408,964 1,732,364
David A. Norbury 150,332,592 1,808,736
William J. Pratt 150,350,057 1,791,271
Daniel A. DiLeo 147,491,736 4,649,592
Frederick J. Leonberger 148,531,506 3,609,822
Albert E. Paladino 147,555,989 4,585,339
Erik H. van der Kaay 147,532,389 4,608,939
Walter H. Wilkinson, Jr 147,556,235 4,585,093
Approval of adoption of the 2003 Stock Incentive Plan:
SHARES VOTED IN FAVOR SHARES VOTED AGAINST SHARES ABSTAINING
- -------------------------------- --------------------- ---------------
47,208,694 11,488,390 370,672
Ratification of appointment of Ernst & Young LLP:
SHARES VOTED IN FAVOR SHARES VOTED AGAINST SHARES ABSTAINING
- -------------------------------- --------------------- ---------------
148,770,077 3,053,975 317,276
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
4.1 Form of Note for 1.50% Convertible Subordinated Notes due July 1, 2010
(incorporated by reference to Exhibit 4.6 to the Company's
Registration Statement on Form S-3 (File No. 333-108141)).
4.2 Indenture dated as of July 1, 2003 between the Company and Wachovia
Bank, National Association, as Trustee (incorporated by reference to
Exhibit 4.7 to the Company's Registration Statement on Form S-3 (File
No. 333-108141)).
4.3 Registration Rights Agreement dated as of July 1, 2003 by and among
the Company and the Initial Purchasers named therein (incorporated by
reference to Exhibit 4.8 to the Company's Registration Statement on
Form S-3 (File No. 333-108141)).
10.1 Change of Control Agreement, dated June 9,2003, between RF Micro
Devices, Inc. and Steven E. Creviston*
10.2 Form Stock Option Agreement for Senior Officers pursuant to the 2003
Stock Incentive Plan of RF Micro Devices, Inc.*
10.3 Form Restricted Stock Award Agreement for Senior Officers pursuant to
the 2003 Stock Incentive Plan of RF Micro Devices, Inc.*
31.1 Certification of Periodic Report by Robert A. Bruggeworth, as Chief
Executive Officer, pursuant to Rule 13a-14(a) or 15d-14(a) of the
Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.
31.2 Certification of Periodic Report by William A. Priddy, Jr., as Chief
Financial Officer, pursuant to Rule 13a-14(a) or 15d-14(a) of the
Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.
32.1 Certification of Periodic Report by Robert A. Bruggeworth, as Chief
Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2 Certification of Periodic Report by William A. Priddy, Jr., as Chief
Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
* Executive compensation plan or agreement
(b) Reports on Form 8-K
During the quarter ended September 30, 2003, the Company furnished or filed the
following reports on Form 8-K:
On July 15, 2003, we furnished a Form 8-K under Item 9 to disclose, pursuant to
Item 12, a press release announcing our results for the fiscal 2004 first
quarter ended June 30, 2003.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
RF Micro Devices, Inc.
Dated: November 11, 2003
/S/ WILLIAM A. PRIDDY, JR.
------------------------------
WILLIAM A. PRIDDY, JR.
Chief Financial Officer and
Corporate Vice President of Administration
Dated: November 11, 2003
/S/ BARRY D. CHURCH
------------------------------
BARRY D. CHURCH
Vice President and Corporate Controller
(Principal Accounting Officer)