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Table of Contents

 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
     
þ   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended July 2, 2011
or
     
o   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                     to                    
Commission File Number 0-22511
RF Micro Devices, Inc.
(Exact name of registrant as specified in its charter)
     
North Carolina   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)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
             
Large accelerated filer þ
  Accelerated filer o   Non-accelerated filer o   Smaller reporting company o
 
      (Do not check if a smaller reporting company)    
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ
As of July 25, 2011, there were 276,362,544 shares of the registrant’s common stock outstanding.
 
 

 


 

RF MICRO DEVICES, INC. AND SUBSIDIARIES
INDEX
             
        Page  
PART I — FINANCIAL INFORMATION        
 
           
  Financial Statements.        
 
  Condensed Consolidated Balance Sheets as of July 2, 2011 and April 2, 2011     3  
 
  Condensed Consolidated Statements of Income for the three months ended July 2, 2011 and July 3, 2010     4  
 
  Condensed Consolidated Statements of Cash Flows for the three months ended July 2, 2011 and July 3, 2010     5  
 
  Notes to Condensed Consolidated Financial Statements     6  
 
           
  Management’s Discussion and Analysis of Financial Condition and Results of Operations.     13  
  Quantitative and Qualitative Disclosures About Market Risk.     19  
  Controls and Procedures.     19  
 
           
PART II — OTHER INFORMATION        
 
           
  Risk Factors.     19  
  Unregistered Sales of Equity Securities and Use of Proceeds.     19  
  Exhibits.     20  
 
           
SIGNATURES     21  
EXHIBIT INDEX     22  
 EX-10.1
 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

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PART I — FINANCIAL INFORMATION
ITEM 1.
RF MICRO DEVICES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
                 
    July 2,     April 2,  
    2011     2011  
     
ASSETS
               
Current assets:
               
Cash and cash equivalents
  $ 122,665     $ 131,760  
Restricted cash
    410       422  
Short-term investments (Note 7)
    132,972       159,881  
Accounts receivable, less allowance of $800 as of July 2, 2011 and April 2, 2011
    115,655       120,375  
Inventories (Note 3)
    163,207       149,813  
Prepaid expenses
    9,024       6,960  
Other receivables
    14,420       10,218  
Other current assets (Note 6)
    23,182       20,730  
     
Total current assets
    581,535       600,159  
 
               
Property and equipment, net of accumulated depreciation of $555,101 at July 2, 2011 and $541,318 at April 2, 2011
    214,830       209,478  
Goodwill
    95,628       95,628  
Intangible assets, net
    79,082       83,685  
Long-term investments (Note 1 and Note 7)
    2,762       2,694  
Other non-current assets (Note 6)
    32,994       33,749  
     
Total assets
  $ 1,006,831     $ 1,025,393  
     
 
               
LIABILITIES AND SHAREHOLDERS’ EQUITY
               
Current liabilities:
               
Accounts payable
  $ 88,559     $ 89,490  
Accrued liabilities
    44,594       41,483  
Current portion of long term debt, net of unamortized discount (Note 5)
    45,436       3,852  
Other current liabilities (Note 6)
    207       112  
     
Total current liabilities
    178,796       134,937  
 
               
Long-term debt, net of unamortized discount (Note 5)
    113,694       177,343  
Other long-term liabilities (Note 6)
    34,379       36,758  
     
Total liabilities
    326,869       349,038  
 
               
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; 275,926 and 275,376 shares issued and outstanding at July 2, 2011 and April 2, 2011, respectively
    957,525       966,764  
Additional paid-in capital
    280,809       276,964  
Accumulated other comprehensive income, net of tax
    463       393  
Accumulated deficit
    (558,835 )     (567,766 )
     
Total shareholders’ equity
    679,962       676,355  
     
Total liabilities and shareholders’ equity
  $ 1,006,831     $ 1,025,393  
     
See accompanying Notes to Condensed Consolidated Financial Statements.

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RF MICRO DEVICES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)
                 
    Three Months Ended  
    July 2, 2011     July 3, 2010  
     
Revenue
  $ 214,191     $ 273,842  
 
               
Operating costs and expenses:
               
Cost of goods sold
    136,023       171,435  
Research and development
    36,584       36,101  
Marketing and selling
    15,025       14,368  
General and administrative
    11,530       11,070  
Other operating expense
    176       309  
     
Total operating costs and expenses
    199,338       233,283  
     
Income from operations
    14,853       40,559  
 
               
Interest expense
    (3,016 )     (5,486 )
Interest income
    134       365  
Loss on retirement of convertible subordinated notes (Note 5)
    (778 )      
Other income (Note 1)
    238       806  
     
Income before income taxes
    11,431       36,244  
 
               
Income tax expense (Note 6)
    (2,500 )     (7,903 )
     
Net income
  $ 8,931     $ 28,341  
     
 
               
Net income per share (Note 2):
               
Basic
  $ 0.03     $ 0.10  
Diluted
  $ 0.03     $ 0.10  
 
               
Shares used in per share calculation:
               
Basic
    275,928       270,340  
Diluted
    283,310       277,933  
See accompanying Notes to Condensed Consolidated Financial Statements.

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RF MICRO DEVICES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
                 
    Three Months Ended  
    July 2, 2011     July 3, 2010  
     
Cash flows from operating activities:
               
Net income
  $ 8,931     $ 28,341  
Adjustments to reconcile net income to net cash provided by operating activities:
               
Depreciation
    14,594       16,471  
Amortization and other non-cash items
    6,938       8,973  
Excess tax benefit from exercises of stock options
    (7 )      
Deferred income taxes
    1,020       (207 )
Foreign currency adjustments
    (168 )     (495 )
Asset impairments (including restructuring impairments)
          15  
Loss on retirement of convertible subordinated notes
    778        
Gain on disposal of assets, net
    (135 )     (109 )
Income from equity investment
    (68 )     (226 )
Share-based compensation expense
    5,428       5,311  
Changes in operating assets and liabilities:
               
Accounts receivable, net
    4,651       (21,520 )
Inventories
    (13,210 )     (5,533 )
Prepaid expense and other current and non-current assets
    (6,248 )     (13,680 )
Accounts payable and accrued liabilities
    1,442       19,278  
Income tax payable/recoverable
    (4,408 )     15,888  
Other liabilities
    (480 )     123  
     
Net cash provided by operating activities
    19,058       52,630  
 
               
Investing activities:
               
Purchase of property and equipment
    (19,933 )     (6,582 )
Proceeds from sale of property and equipment
    128       330  
Proceeds from maturities of securities available-for-sale
    33,000       54,550  
Purchase of securities available-for-sale
    (5,998 )     (60,920 )
     
Net cash provided by (used in) investing activities
    7,197       (12,622 )
 
               
Financing activities:
               
Payment of debt
    (27,173 )     (11,212 )
Payments of no net cost loan
          (12,900 )
Excess tax benefit from exercises of stock options
    7        
Proceeds from the issuance of common stock
    989       93  
Repurchase of common stock, including transaction costs
    (5,621 )      
Tax withholding paid on behalf of employees for restricted stock units
    (3,682 )      
Restricted cash associated with financing activities
    (67 )     (65 )
Repayment of capital lease obligations
    (15 )     (23 )
     
Net cash used in financing activities
    (35,562 )     (24,107 )
     
 
               
Net (decrease) increase in cash and cash equivalents
    (9,307 )     15,901  
Effect of exchange rate changes on cash
    212       (217 )
Cash and cash equivalents at the beginning of the period
    131,760       104,778  
     
Cash and cash equivalents at the end of the period
  $ 122,665     $ 120,462  
     
See accompanying Notes to Condensed Consolidated Financial Statements.

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RF MICRO DEVICES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
The accompanying Condensed Consolidated Financial Statements of RF Micro Devices, Inc. and Subsidiaries (together, the “Company” or “RFMD”) have been prepared in conformity with accounting principles generally accepted in the United States. The preparation of these financial statements requires management to make estimates and assumptions, which could differ materially from actual results. In addition, certain information or footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed, or omitted, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). In the opinion of management, the financial statements include all adjustments (which are of a normal and recurring nature) necessary for the fair presentation of the results of the interim periods presented. These condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended April 2, 2011.
The Condensed Consolidated Financial Statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation.
The Company acquired an immaterial investment in a privately-held company in fiscal 2008 and accounted for it under the cost method. During the third quarter of fiscal 2011, this company was recapitalized and restructured, which increased RFMD’s ownership in this company and as a result, RFMD adopted and applied the equity method of accounting to this investment retroactively pursuant to the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 323, “Investments-Equity Method and Joint Ventures” (“ASC 323”). The cumulative effect of this accounting change was immaterial to prior fiscal years and was recorded as an equity investment in fiscal year 2011. As of July 2, 2011, the equity investment is $0.6 million and has increased net income by approximately $0.1 million and $0.2 million for the three months ended July 2, 2011 and July 3, 2010, respectively.
The Company uses a 52- or 53-week fiscal year ending on the Saturday closest to March 31 of each year. The first fiscal quarter of each year ends on the Saturday closest to June 30, the second fiscal quarter of each year ends on the Saturday closest to September 30 and the third fiscal quarter of each year ends on the Saturday closest to December 31.

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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  
    July 2, 2011     July 3, 2010  
     
Numerator:
               
Numerator for basic and diluted net income per share — net income available to common shareholders
  $ 8,931     $ 28,341  
Effect of dilutive securities:
               
Income impact of assumed conversions for interest on 2010 Notes
          26  
     
Numerator for diluted net income per share - net income plus assumed conversion of 2010 Notes
  $ 8,931     $ 28,367  
     
 
               
Denominator:
               
Denominator for basic net income per share — weighted average shares
    275,928       270,340  
Effect of dilutive securities:
               
Employee stock options
    7,382       6,330  
Assumed conversion of 2010 Notes
          1,263  
     
Denominator for diluted net income per share — adjusted weighted average shares and assumed conversions
    283,310       277,933  
     
 
               
Basic net income per share
  $ 0.03     $ 0.10  
     
 
               
Diluted net income per share
  $ 0.03     $ 0.10  
     
In the computation of diluted net income per share for the three months ended July 2, 2011 and July 3, 2010, outstanding stock options to purchase approximately 7.7 million shares and 15.8 million shares, respectively, were excluded because the exercise price of the options was greater than the average market price of the underlying common stock and the effect of their inclusion would have been anti-dilutive.
On July 1, 2010, the Company repaid the $10.0 million outstanding principal balance plus accrued interest on the Company’s 1.50% convertible subordinated notes (the “2010 Notes”) and the conversion option of these notes expired unexercised. The computation of diluted net income per share for the three months ended July 3, 2010 includes the effect of the shares that could have been issued upon conversion of the remaining $10.0 million balance of the Company’s 2010 Notes prior to their maturity on July 1, 2010 (a total of approximately 1.3 million shares).
The computation of diluted net income per share does not assume the conversion of the Company’s $200 million initial aggregate principal amount of 0.75% Convertible Subordinated Notes due 2012 (the “2012 Notes”) or the $175 million initial aggregate principal amount of 1.00% Convertible Subordinated Notes due 2014 (the “2014 Notes”).

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RF MICRO DEVICES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)
2. NET INCOME PER SHARE (continued)
The 2012 Notes and 2014 Notes generally would become dilutive to earnings if the average market price of the Company’s common stock exceeds approximately $8.05 per share. The maximum number of shares issuable upon conversion of the 2012 Notes and 2014 Notes as of July 2, 2011 is approximately 16.9 million shares (excluding an aggregate of $199.9 million principal amount of the Notes that were previously purchased and retired by the Company), which may be adjusted as a result of stock splits, stock dividends and antidilution provisions.
Share Repurchase
During the three months ended July 2, 2011, the Company repurchased 0.9 million shares of its common stock at an average price of $5.93 on the open market.
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):
                 
    July 2, 2011     April 2, 2011  
Raw materials
  $ 42,366     $ 35,851  
Work in process
    58,823       53,219  
Finished goods
    62,018       60,743  
     
Total inventories
  $ 163,207     $ 149,813  
     
4. OTHER COMPREHENSIVE INCOME
Accumulated other comprehensive income for the Company consists of accumulated unrealized gains (losses) on marketable securities, foreign currency translation adjustments and amortization of unrealized actuarial pension valuation gain. This amount is included as a separate component of shareholders’ equity. Comprehensive income is not materially different than net income for the three months ended July 2, 2011 and July 3, 2010.
5. DEBT
Debt balances at July 2, 2011 and April 2, 2011 are as follows (in thousands):
                 
    July 2, 2011     April 2, 2011  
Convertible subordinated notes due 2012, net of discount
  $ 38,325     $ 58,317  
Convertible subordinated notes due 2014, net of discount
    113,694       111,992  
Bank loan
    7,111       7,034  
Equipment term loan, net of discount
          3,852  
 
           
Total debt
    159,130       181,195  
Less current portion
    45,436       3,852  
 
           
Total long-term debt
  $ 113,694     $ 177,343  
 
           

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RF MICRO DEVICES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)
5. DEBT (continued)
Convertible Debt
During the first quarter of fiscal 2012, the Company purchased and retired $22.0 million original principal amount of its 2012 Notes for an average price of $105.48, which resulted in a loss of approximately $0.8 million. In accordance with FASB ASC 470-20, “Debt — Debt with Conversions and Other Options” (“ASC 470-20”), the Company records gains and losses on the early retirement of its 2012 Notes and its 2014 Notes in the period of derecognition, depending on whether the fair market value at the time of derecognition was greater than, or less than, the carrying value of the debt.
The Company’s 2012 Notes became current during the first quarter of fiscal 2012 and are now reflected in “current portion of long-term debt” on its condensed consolidated balance sheet.
As of July 2, 2011, the 2012 Notes had a fair value on the Private Offerings, Resale and Trading through Automated Linkages (“PORTAL”) Market of $42.7 million compared to a carrying value of $38.3 million.  As of April 2, 2011, the 2012 Notes had a fair value on the PORTAL Market of $66.1 million compared to a carrying value of $58.3 million.
As of July 2, 2011, the 2014 Notes had a fair value on the PORTAL Market of $146.7 million compared to a carrying value of $113.7 million. As of April 2, 2011, the 2014 Notes had a fair value on the PORTAL Market of $145.0 million compared to a carrying value of $112.0 million.
Total non-cash interest expense related to the Company’s 2012 and 2014 Notes was $2.4 million for the three months ended July 2, 2011 and $4.4 million for the three months ended July 3, 2010.
Bank Loan
The bank loan became current during the first quarter of fiscal 2012 and is now reflected in “current portion of long-term debt” on the Company’s condensed consolidated balance sheet.
Equipment Term Loan
In the first quarter of fiscal 2012, the equipment term loan became due and the remaining balance of $3.9 million was paid with cash on hand.
6. INCOME TAXES
Income Tax Expense
The Company’s provision for income taxes for the reporting periods ended July 2, 2011 and July 3, 2010 has been calculated by applying an estimate of the annual effective tax rate for the full fiscal year to “ordinary” income or loss (pre-tax income or loss excluding unusual or infrequently occurring discrete items) for the reporting period.
The Company’s income tax expense for the three months ended July 2, 2011 and July 3, 2010 was $2.5 million and $7.9 million, respectively. The Company’s effective tax rate for the three months ended July 2, 2011 and July 3, 2010 was 21.9% and 21.8%, respectively. The Company’s effective tax rate for the first quarter of fiscal 2012 differed from the statutory rate primarily due to tax rate differences in foreign jurisdictions, state income taxes, domestic tax credits generated, and adjustments to the valuation allowance limiting the recognition of the benefit of domestic deferred tax assets. The Company’s effective tax rate for the first quarter of fiscal 2011 differed from the statutory rate primarily due to tax rate differences in foreign jurisdictions, state income taxes, domestic tax credits generated, and adjustments to the valuation allowance limiting the recognition of the benefit of domestic and foreign deferred tax assets.

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RF MICRO DEVICES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)
6. INCOME TAXES (continued)
Deferred Taxes
The valuation allowance against net deferred tax assets has decreased by $1.3 million from the $92.3 million balance as of the end of fiscal 2011. The Company intends to maintain a valuation allowance against its deferred tax assets until sufficient positive evidence exists to support its full or partial reversal. The amount of the deferred tax assets actually realized could vary depending upon the amount of taxable income the Company is able to generate in the various taxing jurisdictions in which the Company has operations.
The Company has outstanding domestic federal and state tax net operating loss (“NOLs”) carry-forwards that will begin to expire in fiscal 2020 and fiscal 2012, respectively, if unused. The use of those NOLs which were acquired in prior year acquisitions is subject to certain annual limitations under Internal Revenue Code Section 382 and similar state tax provisions. In addition, the Company has U.K. loss carryovers that carry forward indefinitely.
Uncertain Tax Positions
The Company’s gross unrecognized tax benefits increased from $32.9 million as of the end of fiscal 2011 to $33.1 million as of the end of the first quarter of fiscal 2012, with the change arising from a $0.2 million increase related to tax positions taken with respect to the current fiscal year.
U.S. federal tax returns through fiscal 2009, North Carolina tax returns through fiscal 2008, and German tax returns through calendar 2007 have been examined by their respective taxing authorities. Subsequent tax years in each of those jurisdictions remain open for examination. Other material jurisdictions that are subject to examination by tax authorities are California (fiscal 2006 through present), the U.K. (fiscal 2002 through present), and China (calendar year 2000 through present).
7. INVESTMENTS AND FAIR VALUE MEASUREMENTS
Available-For-Sale
The following is a summary of available-for-sale securities as of July 2, 2011 and April 2, 2011 (in thousands):
                                 
    Available-for-Sale Securities  
            Gross     Gross        
            Unrealized     Unrealized     Estimated Fair  
    Cost     Gains     Losses     Value  
July 2, 2011
                               
U.S. government/agency securities
  $ 132,908     $ 65     $ (1 )   $ 132,972  
Auction rate securities
    2,150                   2,150  
Money market funds
    27,255                   27,255  
     
 
  $ 162,313     $ 65     $ (1 )   $ 162,377  
     
 
                               
April 2, 2011
                               
U.S. government/agency securities
  $ 159,837     $ 44     $     $ 159,881  
Auction rate securities
    2,150                   2,150  
Money market funds
    31,748                   31,748  
     
 
  $ 193,735     $ 44     $     $ 193,779  
     
The estimated fair value of available-for-sale securities was based on the prevailing market values on July 2, 2011 and April 2, 2011. We determine the cost of an investment sold based on the specific identification method.

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RF MICRO DEVICES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)
7. INVESTMENTS AND FAIR VALUE MEASUREMENTS (continued)
There were no gross realized gains or losses recognized on available-for-sale securities for the three months ended July 2, 2011 and July 3, 2010.
No available-for-sale investments were in a continuous unrealized loss position as of July 2, 2011 and April 2, 2011.
The amortized cost of available-for-sale investments in debt securities with contractual maturities is as follows (in thousands):
                                 
    July 2, 2011     April 2, 2011  
            Estimated             Estimated  
    Cost     Fair Value     Cost     Fair Value  
Due in less than one year
  $ 160,163     $ 160,227     $ 191,585     $ 191,629  
Due after ten years
    2,150       2,150       2,150       2,150  
 
                       
Total investments in debt securities
  $ 162,313     $ 162,377     $ 193,735     $ 193,779  
 
                       
Fair Value Measurements
On a quarterly basis, the Company measures the fair value of its marketable securities, which are comprised of U.S. government/agency securities, auction rate securities (ARS), and money market funds. Marketable securities are reported at fair value in cash and cash equivalents, short-term investments and long-term investments on the Company’s condensed consolidated balance sheet. The related unrealized gains and losses are included in accumulated other comprehensive income, a component of shareholders’ equity, net of tax.
Recurring Fair Value Measurements
The fair value of the financial assets measured at fair value on a recurring basis was determined using the following levels of inputs as of July 2, 2011 and April 2, 2011 (in thousands):
                                 
            Quoted Prices In              
            Active Markets For     Significant Other     Significant  
            Identical Assets     Observable Inputs     Unobservable Inputs  
    Total     (Level 1)     (Level 2)     (Level 3)  
 
                               
July 2, 2011
                               
U.S. government/agency securities
  $ 132,972     $ 132,972     $     $  
Auction rate securities
    2,150             2,150        
Money market funds
    27,255       27,255              
 
                       
 
  $ 162,377     $ 160,227     $ 2,150     $  
 
                       
 
                               
April 2, 2011
                               
U.S. government/agency securities
  $ 159,881     $ 159,881     $     $  
Auction rate securities
    2,150             2,150        
Money market funds
    31,748       31,748              
 
                       
 
  $ 193,779     $ 191,629     $ 2,150     $  
 
                       
ARS are debt instruments with interest rates that reset through periodic short-term auctions. The Company’s Level 2 ARS are valued at par based on quoted prices for identical or similar instruments in markets that are not active.

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RF MICRO DEVICES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(CONTINUED)
(Unaudited)
7. INVESTMENTS AND FAIR VALUE MEASUREMENTS (continued)
Nonrecurring Fair Value Measurements
The Company’s non-financial assets, such as goodwill, intangible assets, and property and equipment are measured at fair value when there is an indicator of impairment and recorded at fair value only when an impairment charge is recognized. The Company did not have any non-financial assets or liabilities measured at fair value during the three months ended July 2, 2011 and July 3, 2010.
Financial Instruments Not Recorded at Fair Value
The carrying values of cash and cash equivalents, short-term investments, accounts receivable, accounts payable and other accrued liabilities, approximate fair value as of July 2, 2011 and April 2, 2011. See Note 5 to the Condensed Consolidated Financial Statements for a discussion of the fair value of our debt instruments.
8. SUBSEQUENT EVENTS
During the second quarter of fiscal 2012 (through August 11, 2011), the Company repurchased 1.0 million shares of its common stock at an average price of $5.82 on the open market.

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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 within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that relate to our plans, objectives, estimates and goals. Statements expressing expectations regarding our future and projections relating to products, sales, revenues and earnings are typical of such statements and are made under the Private Securities Litigation Reform Act of 1995. Words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” and “estimate,” and variations of such words and similar expressions, identify such forward-looking statements. Our business is subject to numerous risks and uncertainties, including the following:
    changes in business and economic conditions, including downturns in the semiconductor industry and/or the overall economy;
 
    our ability to accurately predict market requirements and evolving industry standards in a timely manner;
 
    our ability to accurately predict customer demand and thereby avoid the possibility of obsolete inventory, which would reduce our profit margins;
 
    our customers’ and distributors’ ability to manage the inventory they hold and forecast their demand;
 
    our ability to achieve cost savings and improve yields and margins on our new and existing products;
 
    our ability to respond to possible downward pressure on the average selling prices of our products caused by our customers or our competitors;
 
    our ability to efficiently utilize our capacity, or to acquire additional capacity, in response to customer demand;
 
    the inability of certain of our customers to access their traditional sources of credit, which could lead them to reduce their level of purchases or seek credit or other accommodations from us;
 
    our ability to continue to improve our product designs and develop new products in response to new technologies;
 
    our dependence on a limited number of customers for a substantial portion of our revenue;
 
    our ability to bring new products to market in response to market shifts and to use technological innovation to shorten time-to-market for our products;
 
    the risks associated with the operation of our molecular beam epitaxy (MBE) facility, our wafer fabrication facilities, our assembly facility and our test and tape and reel facilities;
 
    variability in manufacturing yields, raw material costs and availability;
 
    our dependence on third parties, including wafer foundries, passive component manufacturers, assembly and packaging suppliers and test and tape and reel suppliers;
 
    our ability to manage channel partner and customer relationships;
 
    currency fluctuations, tariffs, trade barriers, tax and export license requirements and health and security issues associated with our foreign operations; and
 
    our ability to attract and retain skilled personnel and develop leaders for key business units and functions.

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These and other risks and uncertainties, which are described in more detail in our most recent Annual Report on Form 10-K and in other reports and statements that we file with the Securities and Exchange Commission, could cause the actual results and developments to be materially different from those expressed or implied by any of these forward-looking statements. Forward-looking statements speak only as of the date they were made and we undertake no obligation to update or revise such statements, except as required by the federal securities laws.
OVERVIEW
The following Management’s Discussion and Analysis (“MD&A”) is intended to help the reader understand the results of operations and financial condition of RF Micro Devices, Inc. MD&A is provided as a supplement to, and should be read in conjunction with, our condensed consolidated financial statements and accompanying notes.
We are a 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.
FIRST QUARTER FISCAL 2012 FINANCIAL HIGHLIGHTS:
  Quarterly revenue decreased by 21.8% as compared to the first quarter of fiscal 2011. Sales of our cellular products decreased primarily due to lower sales to Nokia driven by the expected decline of transceiver product sales. These decreases to revenue were partially offset by an increase in sales of our 3G/4G cellular components to customers other than Nokia and an increase in sales of our multi-market products (including our components for WiFi applications, wireless infrastructure products and our GaN products used in radar equipment and cable equipment).
 
  Gross margin for the quarter was 36.5% as compared to 37.4% in the corresponding quarter of fiscal 2011. The decrease was due to lower factory utilization rates and an erosion in average selling prices, partially offset by a favorable product mix toward higher margin products.
 
  Operating income was $14.9 million for the first quarter of fiscal 2012 as compared to $40.6 million for the corresponding quarter of fiscal 2011.
 
  Cash flow from operations was $19.1 million for the first quarter of fiscal 2012 as compared to $52.6 million for the first quarter of fiscal 2011.
 
  Inventory totaled $163.2 million at July 2, 2011, reflecting turns of 3.3 as compared to $128.0 million and turns of 5.4 at July 3, 2010.
 
  During the first quarter of fiscal 2012, we purchased and retired $22.0 million original principal amount of our 2012 Notes for an average price of $105.48, which resulted in a loss of approximately $0.8 million.
 
  During the first quarter of fiscal 2012, we repurchased 0.9 million shares of our common stock at an average price of $5.93 on the open market.

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The following tables present a summary of our results of operations for the three months ended July 2, 2011 and July 3, 2010.
                                                 
    Three Months Ended              
    July 2,     % of     July 3,     % of     Increase     Percentage  
(In thousands, except percentages)   2011     Revenue     2010     Revenue     (Decrease)     Change  
         
 
                                               
Revenue
  $ 214,191       100.0 %   $ 273,842       100.0 %   $ (59,651 )     (21.8) %
Cost of goods sold
    136,023       63.5       171,435       62.6       (35,412 )     (20.7 )
 
                                       
Gross margin
    78,168       36.5       102,407       37.4       (24,239 )     (23.7 )
Research and development
    36,584       17.1       36,101       13.2       483       1.3  
Marketing and selling
    15,025       7.0       14,368       5.2       657       4.6  
General and administrative
    11,530       5.4       11,070       4.1       460       4.2  
Other operating expense
    176       0.1       309       0.1       (133 )     (43.0 )
 
                                       
Operating income
  $ 14,853       6.9 %   $ 40,559       14.8 %     (25,706 )     (63.4 )
 
                                       
REVENUE
Our revenue decreased during the three months ended July 2, 2011 as compared to the corresponding period of fiscal 2011. For the quarter, sales of our cellular products decreased year-over-year primarily due to lower sales to Nokia driven by the expected decline of transceiver product sales. These decreases to revenue were partially offset by an increase in sales of our 3G/4G cellular components to customers other than Nokia and an increase in sales of our multi-market products (including our components for WiFi applications, wireless infrastructure products and our GaN products used in radar equipment and cable equipment).
OPERATING INCOME
Operating income was $14.9 million for the three months ended July 2, 2011, compared to operating income of $40.6 million for the three months ended July 3, 2010. Our operating income decreased primarily due to lower sales.
Gross Margin
Our gross margin for the three months ended July 2, 2011 decreased to 36.5% compared to 37.4% for the three months ended July 3, 2010 due to lower factory utilization rates and an erosion in average selling prices, partially offset by a favorable product mix toward higher margin products.
Operating Expenses
Research and development, marketing and selling and general and administrative expenses for the three months ended July 2, 2011 increased slightly in absolute dollars as compared to the three months ended July 3, 2010. These expenses totaled 29.5% of revenue for the three months ended July 2, 2011 as compared to 22.5% of revenue for the three months ended July 3, 2010, primarily due to lower sales.

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OTHER (EXPENSE) INCOME AND INCOME TAXES
                 
    Three Months Ended
    July 2,   July 3,
(In thousands)   2011   2010
Interest expense
  $ (3,016 )   $ (5,486 )
Interest income
    134       365  
Loss on retirement of convertible subordinated notes
    (778 )      
Other income
    238       806  
Income tax expense
    (2,500 )     (7,903 )
Interest Expense
Interest expense decreased for the three months ended July 2, 2011 as compared to the three months ended July 3, 2010, primarily due to the purchase and early retirements of $157.5 million original principal amount of the 2012 Notes from the second quarter of fiscal 2011 to the first quarter of fiscal 2012.
Our interest expense included cash interest of $0.6 million and $1.0 million for the three months ended July 2, 2011 and July 3, 2010, respectively.
Loss on the Retirement of Convertible Subordinated Notes
In the first quarter of fiscal 2012, we purchased and retired $22.0 million original principal amount of our 2012 Notes for an average price of $105.48, which resulted in a loss of approximately $0.8 million as a result of applying ASC 470-20. ASC 470-20 requires us to record gains and losses on the early retirement of our 2012 Notes and our 2014 Notes in the period of derecognition, depending on whether the fair market value at the time of derecognition was greater than, or less than, the carrying value of the debt.
Other Income
The decrease in other income for the three months ended July 2, 2011 is primarily related to the foreign currency exchange rate impact on our Euro, Renminbi (or Yuan) and Sterling denominated accounts as the balances change and the exchange rates fluctuate in relation to the U.S. dollar.
Income Taxes
Our provision for income taxes for the reporting periods ended July 2, 2011 and July 3, 2010 has been calculated by applying an estimate of the annual effective tax rate for the full fiscal year to “ordinary” income or loss (pre-tax income or loss excluding unusual or infrequently occurring discrete items) for the reporting period.
Income tax expense for the three months ended July 2, 2011 was $2.5 million, which is comprised primarily of tax expense related to domestic and international operations, offset by a tax benefit related to changes in the domestic deferred tax asset valuation allowance. Income tax expense for the three months ended July 3, 2010 was $7.9 million, which is comprised primarily of tax expense related to domestic and international operations, offset by a tax benefit related to changes in the domestic and foreign deferred tax asset valuation allowances.
The valuation allowance against net deferred tax assets has decreased by $1.3 million from the $92.3 million balance as of the end of fiscal 2011. We intend to maintain a valuation allowance against the deferred tax assets until sufficient positive evidence exists to support its full or partial reversal. The amount of the deferred tax assets actually realized could vary depending upon the amount of taxable income we are able to generate in the various taxing jurisdictions in which we have operations.

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LIQUIDITY AND CAPITAL RESOURCES
We have funded our operations to date through sales of equity and debt securities, bank borrowings, capital equipment leases and revenue from product sales. Through public and Rule 144A securities offerings, we have raised approximately $1,053.3 million, net of offering expenses. As of July 2, 2011, we had working capital of approximately $402.7 million, including $122.7 million in cash and cash equivalents, compared to working capital of approximately $443.9 million at July 3, 2010, including $120.5 million in cash and cash equivalents. As of July 2, 2011, our total cash, cash equivalents and short-term investments balance exceeded our remaining principal amount of 2012 Notes and 2014 Notes by $80.5 million.
On January 25, 2011, we announced that our Board of Directors authorized the repurchase of up to $200.0 million of our outstanding common stock, exclusive of related fees, commissions or other expenses, from time to time during a period commencing on January 28, 2011 and expiring on January 27, 2013. This share repurchase program authorizes us to repurchase shares through solicited or unsolicited transactions in the open market or in privately negotiated transactions. During the first quarter of fiscal 2012, we repurchased approximately 0.9 million shares of our common stock at an average price of $5.93 on the open market.
Cash Flows from Operating Activities
Operating activities for the three months ended July 2, 2011 generated cash of $19.1 million, compared to $52.6 million for the three months ended July 3, 2010. This year-over-year decrease was primarily attributable to decreased profitability and an increase in raw material and work in process inventory related to the expected ramp of several new products, including products that have longer lead times due to their silicon content.
Cash Flows from Investing Activities
Net cash provided by investing activities for the three months ended July 2, 2011 was $7.2 million, compared to net cash used in investing activities of $12.6 million for the three months ended July 3, 2010. The increase in cash provided by investment activities was primarily due to lower investment activity and lower proceeds from maturities of available-for-sale securities, partially offset by increased capital expenditures related to the expansion of our manufacturing capacity during the first three months of fiscal 2012 as compared to the first three months of fiscal 2011.
Cash Flows from Financing Activities
Net cash used in financing activities was $35.6 million for the three months ended July 2, 2011, compared to $24.1 million for the three months ended July 3, 2010. This increase in cash used in financing activities was primarily due to the repurchase of 0.9 million shares of common stock for $5.6 million (including transaction costs) and $3.7 million of tax withholding paid on behalf of employees for restricted stock units.
COMMITMENTS AND CONTINGENCIES
Equipment Term Loan In the first quarter of fiscal 2012, the equipment term loan became due and the remaining balance of $3.9 million was paid with cash on hand.
Bank Loan As of July 2, 2011, the $7.1 million balance of our bank loan, which is payable in April 2012, is now reflected in “current portion of long-term debt” on our condensed consolidated balance sheet.
Convertible Debt During the first quarter of fiscal 2012, we purchased and retired $22.0 million aggregate principal amount of our 2012 Notes for an average price of $105.48, which resulted in a loss of approximately $0.8 million. As of July 2, 2011, the 2012 Notes had a fair value on the PORTAL Market of $42.7 million compared to a carrying value of $38.3 million. As of April 2, 2011, the 2012 Notes had a fair value on the PORTAL Market of $66.1 million compared to a carrying value of $58.3 million.
As of July 2, 2011, our 2012 Notes which mature on April 15, 2012, are now reflected in “current portion of long-term debt” on our condensed consolidated balance sheet.
As of July 2, 2011, the 2014 Notes had a fair value on the PORTAL Market of $146.7 million compared to a carrying value of $113.7 million. As of April 2, 2011, the 2014 Notes had a fair value on the PORTAL Market of $145.0 million compared to a carrying value of $112.0 million.

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We may from time to time seek to retire or purchase additional amounts of our outstanding convertible notes through cash purchases or exchanges for equity securities, in open market purchases, privately negotiated transactions or otherwise. Such purchases or exchanges, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors and the amounts involved may be material.
Convertible Debt Obligations The following table summarizes our convertible debt obligations, including interest, as of July 2, 2011, and the effect such obligations are expected to have on our liquidity and cash flows in future periods. Other than as set forth below, there have been no material changes outside the ordinary course of business to our contractual obligations and commitments as set forth in our Annual Report on Form 10-K for the fiscal year ended April 2, 2011.
                                                 
            Payments Due By Period (in thousands)  
            Total     Less than                     More than  
    Par Value     Payments     1 year     1-3 years     3-5 years     5 years  
           
Convertible subordinated notes due 2012
  $ 40,248     $ 40,550     $ 40,550     $     $     $  
Convertible subordinated notes due 2014
    134,901       138,948       1,349       137,599              
           
Total convertible debt
  $ 175,149     $ 179,498     $ 41,899     $ 137,599     $     $  
           
Capital Commitments At July 2, 2011, we had short-term capital commitments of approximately $6.9 million.
Future Sources of Funding Our future capital requirements may differ materially from those currently anticipated and will depend on many factors, including, but not limited to, volume pricing concessions, capital improvements, demand for our products, technological advances and our relationships with suppliers and customers. Based on current and projected levels of cash flow from operations, we believe that we have sufficient liquidity to meet both our short-term and long-term cash requirements. However, if current economic conditions or other factors materially reduce the demand for our products, or in the event that growth is faster than we had anticipated, operating cash flows may be insufficient to meet our needs. If existing resources and cash from operations are not sufficient to meet our future requirements or if we perceive conditions to be favorable, we may seek additional debt or equity financing, additional credit facilities, enter into sale-leaseback transactions or obtain asset-based financing. We cannot be sure that any additional equity or debt financing will not be dilutive to holders of our common stock. Further, we cannot be sure that additional equity or debt financing, if required, will be available on favorable terms, if at all, particularly given the current macroeconomic conditions.
Legal We are involved in various legal proceedings and claims that have arisen in the ordinary course of our business that have not been fully adjudicated. These actions, when finally concluded and determined, will not, in the opinion of management, have a material adverse effect on our consolidated financial position or results of operations.
Taxes We are subject to income and other taxes in the United States and in numerous foreign jurisdictions. Our domestic and foreign tax liabilities are subject to the allocation of revenues and expenses in different jurisdictions. Additionally, the amount of taxes paid is subject to our interpretation of applicable tax laws in the jurisdictions in which we operate. We are subject to audits by tax authorities. While we endeavor to comply with all applicable tax laws, there can be no assurance that a governing tax authority will not have a different interpretation of the law than we do or that we will comply in all respects with applicable tax laws, which could result in additional taxes. There can be no assurance that the outcomes from tax audits will not have an adverse effect on our results of operations in the period during which the review is conducted.
Critical Accounting Policies and Estimates
There have been no material changes to our critical accounting policies and estimates from the information provided in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” included in our Annual Report on Form 10-K for the fiscal year ended April 2, 2011.

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ITEM 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
There have been no material changes to our market risk exposures during the first quarter of fiscal 2012. For a discussion of our exposure to market risk, refer to Item 7A, “Quantitative and Qualitative Disclosures About Market Risk,” contained in our Annual Report on Form 10-K for the fiscal year ended April 2, 2011.
ITEM 4.   CONTROLS AND PROCEDURES.
As of the end of the period covered by this report, the Company’s management, with the participation of 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(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act). Based upon their evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective for the purpose of ensuring that the information required to be disclosed in the reports that the Company files or submits under the Exchange Act with the Securities and Exchange Commission (the SEC) (i) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and (ii) is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
In addition, there were no changes in the 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 1A.   RISK FACTORS.
In addition to the other information set forth in this report and in our other reports and statements that we file with the SEC, including our quarterly reports on Form 10-Q, careful consideration should be given to the factors discussed in Part I, Item 1A., “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended April 2, 2011, which could materially affect our business, financial condition or future results. The risks described in our Annual Report on Form 10-K are not the only risks that we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.
ITEM 2.   UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
(c) Issuer Purchases of Equity Securities
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.
The following table summarizes our common stock repurchases for the fiscal quarter ended July 2, 2011:
                                 
                    Total number of shares     Approximate dollar value of  
    Total number of     Average price     purchased as part of     shares that may yet be  
    shares     paid per     publicly announced     purchased under the plans or  
Period   purchased     share     plans or programs     programs  
April 3, 2011 to April 30, 2011
    0     $ 0.00       0     $187.4 million
May 1, 2011 to May 28, 2011
    900,000     $ 5.93       900,000     $182.1 million
May 29, 2011 to July 2, 2011
    44,900     $ 5.98       44,900     $181.8 million
 
                         
Total
    944,900     $ 5.93       944,900     $181.8 million
 
                         

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ITEM 6.   EXHIBITS.
     
10.1
  RF Micro Devices, Inc. Cash Bonus Plan (as amended and restated effective June 20, 2011)*
 
   
31.1
  Certification of Periodic Report by Robert A. Bruggeworth, as Chief Executive Officer, pursuant to Rule 13a-14(a) or 15d-14(a) of the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
 
   
31.2
  Certification of Periodic Report by William A. Priddy, Jr., as Chief Financial Officer, pursuant to Rule 13a-14(a) or 15d-14(a) of the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
 
   
32.1
  Certification of Periodic Report by Robert A. Bruggeworth, as Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 
   
32.2
  Certification of Periodic Report by William A. Priddy, Jr., as Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 
   
101
  The following materials from our Quarterly Report on Form 10-Q for the quarter ended July 2, 2011, formatted in XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets as of July 2, 2011 and April 2, 2011; (ii) the Condensed Consolidated Statements of Income for the three months ended July 2, 2011 and July 3, 2010; (iii) the Consolidated Statements of Cash Flows for the three months ended July 2, 2011 and July 3, 2010; and (iv) the Notes to the Condensed Consolidated Financial Statements**
 
*   Executive compensation plan or agreement.
 
**   Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
         
  RF Micro Devices, Inc.
 
 
Date: August 11, 2011  /s/ William A. Priddy, Jr.    
  William A. Priddy, Jr.   
  Chief Financial Officer, Corporate
Vice President of Administration and Secretary
(Principal Financial Officer) 
 
 
     
Date: August 11, 2011  /s/ Barry D. Church    
  Barry D. Church   
  Vice President and Corporate Controller
(Principal Accounting Officer) 
 
 

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EXHIBIT INDEX
     
10.1
  RF Micro Devices, Inc. Cash Bonus Plan (as amended and restated effective June 20, 2011)*
 
   
31.1
  Certification of Periodic Report by Robert A. Bruggeworth, as Chief Executive Officer, pursuant to Rule 13a-14(a) or 15d-14(a) of the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
 
   
31.2
  Certification of Periodic Report by William A. Priddy, Jr., as Chief Financial Officer, pursuant to Rule 13a-14(a) or 15d-14(a) of the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
 
   
32.1
  Certification of Periodic Report by Robert A. Bruggeworth, as Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 
   
32.2
  Certification of Periodic Report by William A. Priddy, Jr., as Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 
   
101
  The following materials from our Quarterly Report on Form 10-Q for the quarter ended July 2, 2011, formatted in XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets as of July 2, 2011 and April 2, 2011; (ii) the Condensed Consolidated Statements of Income for the three months ended July 2, 2011 and July 3, 2010; (iii) the Consolidated Statements of Cash Flows for the three months ended July 2, 2011 and July 3, 2010; and (iv) the Notes to the Condensed Consolidated Financial Statements**
 
*   Executive compensation plan or agreement.
 
**   Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.
Our SEC file number for documents filed with the SEC pursuant to the Securities Exchange Act of 1934, as amended, is 000-22511.

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