RF Micro Devices^® Press Release - October 26, 2010

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

GREENSBORO, N.C., Oct 26, 2010 /PRNewswire via COMTEX News Network/ -- Company Highlights:
Revenue Increases 12% Year-Over-Year To A Record $285.8 Million GAAP Operating Income Grows To $42.4 Million, Or 14.8% Of Revenue, And GAAP Diluted EPS Equals $0.13

Non-GAAP Operating Income Increases To A Record $57.1 Million, Or 20% Of Revenue, And Non-GAAP Diluted EPS Is A Record $0.19

RFMD Generates A Record $56.1 Million In Quarterly Free Cash Flow
RF Micro Devices, Inc. (Nasdaq GS: RFMD), a global leader in the design and manufacture of high-performance radio frequency components and compound semiconductor technologies, today reported financial results for its fiscal 2011 second quarter, ended October 2, 2010.

RFMD's quarterly revenue increased approximately 12% year-over-year and 4.4% sequentially to $285.8 million. On a GAAP basis, gross margin equaled 38.0%, quarterly operating income totaled $42.4 million, and quarterly net income was $35.1 million, or $0.13 per diluted share. On a non-GAAP basis, gross margin equaled 39.8%, quarterly operating income totaled a record $57.1 million, and quarterly net income was a record $52.3 million, or $0.19 per diluted share.

During the quarter, RFMD generated a record $56.1 million in free cash flow (net cash provided by operating activities during the period, minus property and equipment expenditures made during the period) and achieved a positive net cash position. RFMD defines "positive net cash" as cash and cash equivalents and short-term investments exceeding the principal amount of RFMD's convertible subordinated notes due 2012 and 2014.

RFMD Strategic Highlights:
RFMD achieved substantial year-over-year and continued sequential revenue growth in both the Cellular Products Group (CPG) and the Multi-Market Products Group (MPG)
RFMD increased sales to customers outside its largest customer by approximately 53% year-over-year, driven by market share gains at targeted handset customers and broad-based growth in MPG's end markets

RFMD introduced 74 new and derivative products during the quarter targeting diverse market segments

RFMD secured major design wins during the quarter, including components for smartphones, mobile tablet devices, Smart Energy applications, high-power GaN applications, and wireless infrastructure
 
 

                              GAAP RESULTS
                               ------------
      (in millions,
          except
     percentages and   Q2      Q1                          Q2
            per      Fiscal  Fiscal         Change       Fiscal   Change
                                            vs. Q1                vs. Q2
       share data)     2011    2011           2011         2010     2010
       -----------     ----    ----        -------         ----  -------
    Revenue          $285.8  $273.8             4.4%     $254.8      12.2%
    Gross Margin       38.0%   37.4%            0.6  ppt   35.9%      2.1  ppt
    Operating Income  $42.4   $40.6            $1.8       $24.1     $18.3
    Net Income        $35.1   $28.1            $7.0       $14.6     $20.5
    Diluted EPS       $0.13   $0.10           $0.03       $0.05     $0.08
 
 
 
 
 
       NON-GAAP RESULTS (excluding share-based compensation, amortization
          of intangibles, integration charges, start-up costs, loss on
      retirement of convertible subordinated notes, restructuring charges,
      loss on PP&E, non-cash interest expense on convertible subordinated
                           notes and tax adjustments)
 
 
      (in millions,
          except
     percentages and   Q2      Q1                   Q2
            per      Fiscal  Fiscal   Change      Fiscal   Change
                                      vs. Q1               vs. Q2
       share data)     2011    2011    2011         2010     2010
       -----------     ----    ----  -------        ----  -------
    Gross Margin       39.8%   39.2%      0.6 ppt   38.1%      1.7 ppt
    Operating Income  $57.1   $51.7      $5.4      $41.7     $15.4
    Net Income        $52.3   $44.3      $8.0      $36.9     $15.4
    Diluted EPS       $0.19   $0.16     $0.03      $0.13     $0.06
 

Business Outlook
RFMD currently believes the demand environment in its end markets supports the following expectations and projections:

RFMD expects December quarterly results will be approximately in line with September quarterly results

RFMD expects to continue ramping new customer programs to offset declining end-of-life legacy products

RFMD expects the sequential growth in its core markets to be broad based and supported by strength in Smart Energy, high-performance WiFi, wireless infrastructure, fixed and mobile broadband, smartphones and 3G connected devices

RFMD now expects to achieve record free cash flow in fiscal 2011 in the range of $180-$200 million
RFMD's actual quarterly and annual results may differ from these expectations and projections, and such differences may be material.

Comments From Management
Bob Bruggeworth, president and CEO of RFMD, commented, "RFMD's record quarterly financial performance is the direct result of prior structural changes in strategy and the organization's crisp execution on that strategy. We are leveraging product and technology leadership to drive our growth in core markets, and we are securing the major design wins necessary to power the next wave of our revenue growth.

"During the September quarter, RFMD continued to transition successfully to a more diversified revenue base, with notable strength in smartphones, Smart Energy, and high-performance WiFi. Importantly, RFMD is also experiencing strong design win momentum for our new breakthrough products and technologies, including our PowerSmart(TM) power platform, our silicon-based switches and our gallium nitride-based components. We continue to forecast PowerSmart will ramp in the March 2011 quarter, and we now expect our lead PowerSmart customer will broadly feature PowerSmart across their next-generation smartphone portfolio."

Dean Priddy, CFO and vice president of administration of RFMD, said, "During the September quarter, RFMD demonstrated robust financial performance and achieved several all-time financial records. Of note, RFMD generated record non-GAAP earnings per share of $0.19 and record free cash flow of $56.1 million, while achieving a positive net cash position.

"While we're pleased with our record financial performance, we're even more excited about the future - when we believe our industry-changing technology and new product ramps will continue to support strong growth in revenue, earnings and free cash flow."

Non-GAAP Financial Measures
In addition to disclosing financial results calculated in accordance with United States (U.S.) generally accepted accounting principles (GAAP), RFMD's earnings release contains some or all of the following non-GAAP financial measures: (i) non-GAAP gross profit and gross margin, (ii) non-GAAP operating income and operating margin, (iii) non-GAAP net income, (iv) non-GAAP net income per diluted share, (v) non-GAAP operating expenses (research and development, marketing and selling and general and administrative), (vi) free cash flow, (vii), EBITDA, (viii) return on invested capital (ROIC), and (ix) net debt or positive net cash. Each of these non-GAAP financial measures is either adjusted from GAAP results to exclude certain expenses or derived from multiple GAAP measures, which are outlined in the "Reconciliation of GAAP to Non-GAAP Financial Measures" tables on page 10 and the "Additional Selected Non-GAAP Financial Measures And Reconciliations" tables on pages 11 and 12.
In managing RFMD's business on a consolidated basis, management develops an annual operating plan, which is approved by our Board of Directors, using non-GAAP financial measures. In developing and monitoring performance against this plan, management considers the actual or potential impacts on these non-GAAP financial measures from actions taken to reduce unit costs with the goal of increasing gross margin and operating margin. In addition, management relies upon these non-GAAP financial measures to assess whether research and development efforts are at an appropriate level, and when making decisions about product spending, administrative budgets, and marketing programs. In addition, we believe that non-GAAP financial measures provide useful supplemental information to investors and enable investors to analyze the results of operations in the same way as management. We have chosen to provide this supplemental information to enable investors to perform additional comparisons of operating results, to assess our liquidity and capital position and to analyze financial performance excluding the effect of expenses unrelated to operations, certain non-cash expenses and share-based compensation expense, which may obscure trends in RFMD's underlying performance.

We believe that these non-GAAP financial measures offer an additional view of RFMD's operations that, when coupled with the GAAP results and the reconciliations to corresponding GAAP financial measures, provide a more complete understanding of RFMD's results of operations and the factors and trends affecting RFMD's business. However, these non-GAAP financial measures should be considered as a supplement to, and not as a substitute for, or superior to, the corresponding measures calculated in accordance with GAAP.

Our rationale for using these non-GAAP financial measures, as well as their impact on the presentation of RFMD's operations, are outlined below:

Non-GAAP gross profit and gross margin. Non-GAAP gross profit and gross margin exclude share-based compensation expense, amortization of intangible assets, other non-cash expenses and adjustments for restructuring and integration charges. We believe that exclusion of these costs in presenting non-GAAP gross profit and gross margin gives management and investors a more effective means of evaluating RFMD's historical performance and projected costs and the potential for realizing cost efficiencies. We believe that the majority of RFMD's purchased intangibles are not relevant to analyzing current operations because they generally represent costs incurred by the acquired company to build value prior to acquisition, and thus are effectively part of transaction costs rather than ongoing costs of operating RFMD's business. In this regard, we note that (i) once the intangibles are fully amortized, the intangibles will not be replaced with cash costs and therefore, the exclusion of these costs provides management and investors with better visibility into the actual costs required to generate revenues over time, and (ii) although we set the amortization expense based on useful life of the various assets at the time of the transaction, we cannot influence the timing and amount of the future amortization expense recognition once the lives are established. Similarly, we believe that presentation of non-GAAP gross profit and gross margin and other non-GAAP financial measures that exclude the impact of share-based compensation expense assists management and investors in evaluating the period-over-period performance of RFMD's ongoing operations because (i) the expenses are non-cash in nature, and (ii) although the size of the grants is within our control, the amount of expense varies depending on factors such as short-term fluctuations in stock price volatility and prevailing interest rates, which can be unrelated to the operational performance of RFMD during the period in which the expense is incurred and generally is outside the control of management. Moreover, we believe that the exclusion of share-based compensation expense in presenting non-GAAP gross profit and gross margin and other non-GAAP financial measures is useful to investors to understand the impact of the expensing of share-based compensation to RFMD's gross profit and gross margins and other financial measures in comparison to both prior periods as well as to its competitors. We also believe that the adjustments to profit and margin related to other non-cash expenses and restructuring and integration charges do not constitute part of RFMD's ongoing operations and therefore the exclusion of these costs provides management and investors with better visibility into the actual costs required to generate revenues over time and gives management and investors a more effective means of evaluating our historical and projected performance. We believe disclosure of non-GAAP gross profit and gross margin has economic substance because the excluded expenses do not represent continuing cash expenditures and, as described above, we have little control over the timing and amount of the expenses in question.

Non-GAAP operating income and operating margin. Non-GAAP operating income and operating margin exclude share-based compensation expense, amortization of intangible assets, other non-cash expenses, restructuring and integration charges, loss on PP&E and start-up costs. We believe that presentation of a measure of operating income and operating margin that excludes amortization of intangible assets and share-based compensation expense is useful to both management and investors for the same reasons as described above with respect to our use of non-GAAP gross profit and gross margin. We believe that other non-cash expenses, restructuring and integration charges, loss on PP&E and start-up costs do not constitute part of RFMD's ongoing operations and therefore, the exclusion of these costs provides management and investors with better visibility into the actual costs required to generate revenues over time and gives management and investors a more effective means of evaluating our historical and projected performance. We believe disclosure of non-GAAP operating income and operating margin has economic substance because the excluded expenses are either unrelated to operations or do not represent current cash expenditures.

Non-GAAP net income and non-GAAP net income per diluted share. Non-GAAP net income and non-GAAP net income per diluted share exclude the effects of share-based compensation expense, amortization of intangible assets, other non-cash expenses, restructuring and integration charges, loss on PP&E, start-up costs, loss on retirement of convertible subordinated notes, non-cash interest expense on convertible subordinated notes and also reflect an adjustment of income taxes for cash basis. We believe that presentation of measures of net income and net income per diluted share that exclude these items is useful to both management and investors for the reasons described above with respect to non-GAAP gross profit and gross margin and non-GAAP operating income and operating margin. We believe disclosure of non-GAAP net income and non-GAAP net income per diluted share has economic substance because the excluded expenses are either unrelated to operations or do not represent current cash expenditures.

Non-GAAP research and development, marketing and selling and general and administrative expenses. Non-GAAP research and development, marketing and selling and general and administrative expenses exclude share-based compensation expense, amortization of intangible assets, other non-cash expenses and restructuring and integration charges. We believe that presentation of measures of these operating expenses that exclude amortization of intangible assets and share-based compensation expense is useful to both management and investors for the same reasons as described above with respect to our use of non-GAAP gross profit and gross margin. We believe that other non-cash expenses and restructuring and integration charges do not constitute part of RFMD's ongoing operations and therefore, the exclusion of these costs provides management and investors with better visibility into the actual costs required to generate revenues over time and gives management and investors a more effective means of evaluating our historical and projected performance. We believe disclosure of these non-GAAP operating expenses has economic substance because the excluded expenses are either unrelated to operations or do not represent current cash expenditures.

Free cash flow. RFMD defines free cash flow as net cash provided by operating activities during the period minus property and equipment expenditures made during the period. We use free cash flow as a supplemental financial measure in our evaluation of liquidity and financial strength. Management believes that this measure is useful as an indicator of our ability to service our debt, meet other payment obligations and make strategic investments. Free cash flow should be considered in addition to, rather than as a substitute for, net income as a measure of our performance and net cash provided by operating activities as a measure of our liquidity. Additionally, our definition of free cash flow is limited, in that it does not represent residual cash flows available for discretionary expenditures due to the fact that the measure does not deduct the payments required for debt service and other contractual obligations. Therefore, we believe it is important to view free cash flow as a measure that provides supplemental information to our entire statement of cash flows.

EBITDA. RFMD defines EBITDA as earnings before interest expense and interest income, income tax expenses, depreciation and intangible amortization. Management believes that this measure is useful to evaluate our ongoing operations and as a general indicator of our operating cash flow (in conjunction with a cash flow statement which also includes among other items, changes in working capital and the effect of non-cash charges). The amounts shown for EBITDA as presented herein differ from the amounts calculated under the definition of EBITDA used in our equipment term loan agreement. The definition of EBITDA as used in the loan agreement is further adjusted for certain cash and non-cash charges, including stock compensation expense, and is used to determine compliance with financial covenants.

Non-GAAP ROIC. Return on invested capital (ROIC) is a non-GAAP financial measure that management believes provides useful supplemental information for management and the investor by measuring the effectiveness of our operations' use of invested capital to generate profits. We use ROIC to track how much value we are creating for our shareholders. Non-GAAP ROIC is calculated by dividing annualized non-GAAP operating income, net of cash taxes, by average invested capital. Average invested capital is calculated by subtracting the average of the beginning balance and the ending balance of current liabilities (excluding the current portion of long-term debt and other short-term financings) from the average of the beginning balance and the ending balance of net accounts receivable, inventories, other current assets, net property and equipment and a cash amount equal to seven days of quarterly revenue.

Net debt or positive net cash. Net debt or positive net cash is defined as unrestricted cash, cash equivalents and short-term investments minus the principal amount of RFMD's convertible subordinated notes due 2012 and 2014. Management believes that net debt or positive net cash provides useful information regarding the level of RFMD's indebtedness by reflecting cash and investments that could be used to repay debt.

Limitations of non-GAAP financial measures. The primary material limitations associated with the use of non-GAAP gross profit and gross margin, non-GAAP operating expenses, non-GAAP operating income and operating margin, non-GAAP net income, non-GAAP net income per diluted share, free cash flow, EBITDA, non-GAAP ROIC and net debt or positive net cash, as compared to the most directly comparable GAAP financial measures of gross profit and gross margin, operating expenses, operating income, net income, net income per diluted share and net cash provided by operating activities are (i) they may not be comparable to similarly titled measures used by other companies in RFMD's industry, and (ii) they exclude financial information that some may consider important in evaluating our performance. We compensate for these limitations by providing full disclosure of the differences between these non-GAAP financial measures and the corresponding GAAP financial measures, including a reconciliation of the non-GAAP financial measures to the corresponding GAAP financial measures, to enable investors to perform their own analysis of our gross profit and gross margin, operating expenses, operating income, net income, net income per diluted share and net cash provided by operating activities.

RF Micro Devices will conduct a conference call at 5:00 p.m. EDT today to discuss today's press release. The conference call will be broadcast live over the Internet and can be accessed by any interested party at http://www.rfmd.com (under "Investors"). A telephone playback of the conference call will be available approximately one hour after the call's completion by dialing 303-590-3030 and entering pass code 4326183.

About RFMD
RF Micro Devices, Inc. (Nasdaq GS: RFMD) is a global leader in the design and manufacture of high-performance radio frequency components and compound semiconductor technologies. RFMD's products enable worldwide mobility, provide enhanced connectivity and support advanced functionality in the cellular handset, wireless infrastructure, wireless local area network (WLAN), CATV/broadband and aerospace and defense markets. RFMD is recognized for its diverse portfolio of semiconductor technologies and RF systems expertise and is a preferred supplier to the world's leading mobile device, customer premises and communications equipment providers.
Headquartered in Greensboro, N.C., RFMD is an ISO 9001- and ISO 14001-certified manufacturer with worldwide engineering, design, sales and service facilities. RFMD is traded on the NASDAQ Global Select Market under the symbol RFMD. For more information, please visit RFMD's web site at www.rfmd.com.

This press release includes "forward-looking statements" within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, statements about our plans, objectives, representations and contentions and are not historical facts and typically are identified by use of terms such as "may," "will," "should," "could," "expect," "plan," "anticipate," "believe," "estimate," "predict," "potential," "continue" and similar words, although some forward-looking statements are expressed differently. You should be aware that the forward-looking statements included herein represent management's current judgment and expectations, but our actual results, events and performance could differ materially from those expressed or implied by forward-looking statements. We do not intend to update any of these forward-looking statements or publicly announce the results of any revisions to these forward-looking statements, other than as is required under the federal securities laws. RF Micro Devices' business is subject to numerous risks and uncertainties, including variability in operating results, risks associated with the impact of global macroeconomic and credit conditions on our business and the business of our suppliers and customers, our reliance on a few large customers for a substantial portion of our revenue, the rate of growth and development of wireless markets, our ability to bring new products to market, our reliance on inclusion in third party reference designs for a portion of our revenue, our ability to manage channel partner and customer relationships, risks associated with the operation of our wafer fabrication, molecular beam epitaxy, assembly and test and tape and reel facilities, our ability to complete acquisitions and integrate acquired companies, including the risk that we may not realize expected synergies from our business combinations, our ability to attract and retain skilled personnel and develop leaders, variability in production yields, raw material costs and availability, our ability to reduce costs and improve margins in response to declining average selling prices, our ability to adjust production capacity in a timely fashion in response to changes in demand for our products, dependence on gallium arsenide (GaAs) for the majority of our products, dependence on third parties, and substantial reliance on international sales and operations. These and other risks and uncertainties, which are described in more detail in RF Micro Devices' most recent Annual Report on Form 10-K and other reports and statements filed with the Securities and Exchange Commission, could cause actual results and developments to be materially different from those expressed or implied by any of these forward-looking statements.

RF MICRO DEVICES(R) and RFMD(R) are trademarks of RFMD, LLC. All other trade names, trademarks and registered trademarks are the property of their respective owners.
Financial Tables To Follow
 

                      RF MICRO DEVICES, INC. AND SUBSIDIARIES
                    CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                       (In thousands, except per share data)
                                    (Unaudited)
 
 
                                                Three Months Ended
                                                ------------------
                                                October 2,     October 3,
                                                       2010            2009
                                                        ---            ----
    Total revenue                                  $285,794        $254,757
 
    Costs and expenses:
       Cost of goods sold                           177,139         163,208
       Research and development                      35,604          34,846
       Marketing and selling                         15,094          14,741
       General and administrative                    14,836          16,721
       Other operating expense                          729           1,114
                                                        ---           -----
 
       Total costs and expenses                     243,402         230,630
                                                    -------         -------
 
    Operating income                                 42,392          24,127
    Other expense                                    (4,816)         (6,047)
                                                     ------          ------
 
    Income before income taxes                      $37,576         $18,080
    Income tax expense                               (2,493)         (3,501)
                                                     ------          ------
 
    Net income                                      $35,083         $14,579
                                                    =======         =======
 
    Net income per share, diluted                     $0.13           $0.05
                                                      =====           =====
 
    Weighted average outstanding diluted shares     277,458         298,668
                                                    =======         =======
 
 
 
 
 
                       RF MICRO DEVICES, INC. AND SUBSIDIARIES
                     CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                        (In thousands, except per share data)
                                     (Unaudited)
 
 
                                                Six Months Ended
                                                ----------------
                                                October 2,    October 3,
                                                      2010            2009
                                                      ----            ----
    Total revenue                                 $559,636        $467,297
 
    Costs and expenses:
       Cost of goods sold                          348,575         301,746
       Research and development                     71,705          70,479
       Marketing and selling                        29,462          28,310
       General and administrative                   25,905          27,933
       Other operating expense                       1,038           2,650
                                                     -----           -----
 
       Total costs and expenses                    476,685         431,118
                                                   -------         -------
 
    Operating income                                82,951          36,179
    Other expense                                   (9,357)        (10,245)
                                                    ------         -------
 
    Income before income taxes                     $73,594         $25,934
    Income tax expense                             (10,397)         (6,571)
                                                   -------          ------
 
    Net income                                     $63,197         $19,363
                                                   =======         =======
 
    Net income per share, diluted                    $0.23           $0.07
                                                     =====           =====
 
    Weighted average outstanding diluted shares    277,696         297,573
                                                   =======         =======
 
 
 
 
 
                      RF MICRO DEVICES, INC. AND SUBSIDIARIES
               RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
               (In thousands, except percentages and per share data)
                                    (Unaudited)
 
 
 
                                            Three Months Ended
                                            ------------------
                                   October
                                      2,        July 3,        October 3,
                                      2010          2010             2009
                                      ----          ----             ----
 
    GAAP operating income          $42,392       $40,559          $24,127
      Share-based
       compensation expense          9,135         5,311           11,125
      Amortization of
       intangible assets             4,615         4,615            4,804
      Restructuring charges
       related to fiscal
       2009 strategic                  110           205            1,072
            restructuring and
             adverse macroeconomic
             conditions
      Other expenses
       (restructuring, loss
       on PP&E, integration,           881           999              609
            start-up costs and
             other non-cash
             expenses)
    Non-GAAP operating
     income                         57,133        51,689           41,737
                                    ======        ======           ======
 
    GAAP net income                 35,083        28,115           14,579
      Share-based
       compensation expense          9,135         5,311           11,125
      Amortization of
       intangible assets             4,615         4,615            4,804
      Restructuring charges
       related to fiscal
       2009 strategic                  110           205            1,072
            restructuring and
             adverse macroeconomic
             conditions
      Other expenses
       (restructuring, loss
       on PP&E, integration,           881           999              609
            start-up costs, and
             other non-cash
             expenses)
      Loss on retirement of
       convertible
       subordinated notes            1,646             -                -
      Non-cash interest
       expense on
       convertible
       subordinated notes            3,262         4,414            4,602
      Tax adjustments               (2,415)          684              151
                                    ------           ---              ---
 
    Non-GAAP net income             52,317        44,343           36,942
    Plus:  Income impact
     of assumed
     conversions for
     interest on                         -            15              768
        1.50% convertible
         notes
    Non-GAAP net income
     plus assumed
     conversion of notes-          $52,317       $44,358          $37,710
        Numerator for diluted
         income per share          =======       =======          =======
 
    GAAP and Non-GAAP
     weighted average
     outstanding diluted           277,458       277,933          298,668
        shares                     =======       =======          =======
 
    Non-GAAP net income
     per share, diluted              $0.19         $0.16            $0.13
                                     =====         =====            =====
 
 
 
 
 
 
                                  Three Months Ended
                                  ------------------
                          October 2,                        October 3,
                               2010        July 3, 2010                   2009
                           -----------     ------------      -----------
    GAAP gross
     margin             $108,655    38.0% $102,407    37.4% $91,549    35.9%
      Adjustment
       for
       intangible
       amortization        3,514     1.2%    3,514     1.3%   3,705     1.5%
      Adjustment
       for share-
       based
       compensation        1,248     0.5%      960     0.3%   1,389     0.5%
      Other
       expenses
       (restructuring,
       integration           262     0.1%      508     0.2%     385     0.2%
             and other
              non-cash
              expenses)
    Non-GAAP
     gross
     margin             $113,679    39.8% $107,389    39.2% $97,028    38.1%
                        ========    ====  ========    ====  =======    ====
 
 
 
 
 
                    RF MICRO DEVICES, INC. AND SUBSIDIARIES
      ADDITIONAL SELECTED NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS
                       (In thousands, except percentages)
                                  (Unaudited)
 
 
 
                                                               Three Months
                                                               Ended
                                                                 October 2,
    Non-GAAP Operating Income                                       2010
    -------------------------                                   -----------
    (as a percentage of sales)
 
    GAAP operating income                                               14.8%
      Share-based compensation expense                                   3.2%
      Amortization of intangible assets                                  1.6%
      Restructuring charges related to fiscal 2009 strategic
       restructuring and adverse                                         0.1%
             macroeconomic conditions
      Other expenses (restructuring, loss on PP&E,
       integration, start-up costs and other                             0.3%
             non-cash expenses)
    Non-GAAP operating income                                           20.0%
                                                                        ====
 
 
 
 
 
 
                                          Three Months Ended
                                          ------------------
                              October 2,           July 3,          October 3,
                                 2010               2010            2009
                             -----------         --------       -----------
    GAAP research
     and development
     expense                     $35,604           $36,101         $34,846
    Less:
      Share-based
       compensation
       expense                     1,392             1,343           1,399
      Amortization of
       intangible
       assets                         14                14              12
      Other expenses
       (restructuring,
       integration                    -               384             118
            and other non-
             cash expenses)                                ---             ---
    Non-GAAP
     research and
     development                 $34,198           $34,360         $33,317
        expense                  =======           =======         =======
 
                                      Three Months Ended
                                      ------------------
                            October 2,        July 3,       October 3,
                                 2010               2010             2009
                             -----------          -------       ----------
    GAAP marketing
     and selling
     expense                     $15,094           $14,368         $14,741
    Less:
      Share-based
       compensation
       expense                     1,493             1,198           1,915
      Amortization of
       intangible
       assets                      1,087             1,087           1,087
      Other expenses
       (restructuring,
       integration                    -                 3               8
            and other non-
             cash expenses)
    Non-GAAP
     marketing and
     selling expense             $12,514           $12,080         $11,731
                                 =======           =======         =======
 
                                      Three Months Ended
                                      ------------------
                            October 2,        July 3,       October 3,
                                 2010               2010            2009
                             -----------         --------       -----------
    GAAP general and
     administrative
     expense                     $14,836           $11,070         $16,721
    Less:
      Share-based
       compensation
       expense                     5,002             1,810           6,422
      Other expenses
       (restructuring,
       integration)                   -                -              17
                                    ---
    Non-GAAP
     general and
     administrative               $9,834            $9,260         $10,282
        expense                   ======            ======         =======
 
 
 
 
 
                   RF MICRO DEVICES, INC. AND SUBSIDIARIES
    ADDITIONAL SELECTED NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS
                                 (Unaudited)
 
 
 
                                                    Three Months
    Free Cash Flow (1)                                  Ended
    ------------------
                                                      October 2,
                                                         2010
                                                     -----------
    (In millions)
 
     Net cash provided by operating activities              $61.3
     Purchases of property and equipment                     (5.2)
     Free Cash Flow                                         $56.1
                                                            =====
 
 
 
 
    (1)   Free Cash Flow is calculated as net cash provided by operating
    activities minus property and equipment expenditures.
 
 
 
 
                                                     Three Months
    EBITDA (2)                                           Ended
    ----------                                     October 2, 2010
                                                   ---------------
    (In millions)
 
    Net Income                                               $35.1
       Interest                                                3.9
       Income Tax Expense                                      2.5
       Depreciation                                           15.9
       Amortization                                            4.6
                                                               ---
    EBITDA                                                   $62.0
                                                             =====
 
 
 
 
    (2)  EBITDA is calculated by adjusting net income for interest
    expense and interest income, income tax expense, depreciation and
    intangible amortization.
 
 
 
                       RF MICRO DEVICES, INC. AND SUBSIDIARIES
                        CONDENSED CONSOLIDATED BALANCE SHEETS
                                    (In thousands)
                                     (Unaudited)
 
 
 
                                                 October 2,  April 3,
                                                        2010       2010
                                                        ----       ----
    ASSETS
    Current assets:
        Cash and cash equivalents                   $133,801   $104,778
        Restricted cash and trading security
         investments                                     439     17,698
        Short-term investments                       105,931    134,882
        Accounts receivable, net                     134,739    108,219
        Inventories                                  130,887    122,509
        Other current assets                          62,776     60,738
                                                      ------     ------
      Total current assets                           568,573    548,824
 
    Property and equipment, net                      226,568    247,085
    Intangible assets, net                            92,912    102,169
    Goodwill                                          95,628     95,628
    Long-term investments                              2,150      2,175
    Other non-current assets                          19,769     18,127
      Total assets                                $1,005,600 $1,014,008
                                                  ========== ==========
 
    LIABILITIES AND SHAREHOLDERS' EQUITY
    Current liabilities:
        Accounts payable and accrued liabilities     143,316    124,253
        Current portion of long-term debt              6,459     15,053
        Other short-term liabilities, net              7,804     13,427
                                                       -----     ------
      Total current liabilities                      157,579    152,733
 
    Long-term debt, net                              204,217    289,837
    Other long-term liabilities                       40,111     41,354
                                                      ------     ------
      Total liabilities                              401,907    483,924
 
      Shareholders' equity                           603,693    530,084
                                                     -------    -------
 
      Total liabilities and shareholders' equity  $1,005,600 $1,014,008
                                                  ========== ==========
 

 
 
SOURCE RF Micro Devices, Inc.