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RF Micro Devices Announces Fiscal 2002 Second Quarter Results

Source: RF Micro Devices, Inc.

Quarterly Highlights:

--Revenues Grow 40.3% Sequentially To $98.3 Million --Quarterly Earnings Per Share Equal $0.01 --Gross Profit Increases 930 Basis Points --Module Revenues Increase 86.3% Sequentially --Company Anticipates December Revenues of $99 To $103 Million

Greensboro, NC. RF Micro Devices, Inc. (NASDAQ: RFMD), a leading provider of proprietary radio frequency integrated circuits (RFICs) for wireless communications applications, today reported financial results for its fiscal 2002 second quarter, ended September 30, 2001.

Financial Results
Revenues for the quarter were approximately $98.3 million, a sequential increase of approximately 40.3% versus revenues of $70.1 million for the quarter ended June 30, 2001 and a decrease of approximately 3.9% versus revenues of $102.2 million for the corresponding quarter of fiscal 2001.
Revenues were ahead of the Company s prior guidance for the quarter,
which was provided on September 10, 2001and estimated a 30% sequential
revenue growth, primarily as a result of increased turns business. Power amplifier
(PA) module revenues increased 86.3% sequentially and represented 43.4%
of revenues in the September quarter, versus 32.6% of revenues in the June quarter.

Gross profit for the quarter increased 87.2% sequentially to $36.4 million, versus $19.4 million for the quarter ended June 30, 2001, excluding a special inventory charge taken in the June quarter, and decreased 29.9%, versus $51.9 million for the prior year period. The year-over-year decrease in gross profit was primarily attributable to the decrease in the Company s revenues, the initial higher cost of goods sold associated with the Company s module products and greater than normal yield losses associated with the steep ramp of the module business. The sequential increase in gross profit was primarily attributable to the sequential increase in the Company s revenues as well as the impact of cost reduction and yield improvement initiatives implemented earlier in the fiscal year. Gross profit margin increased sequentially 930 basis points to 37.0% from 27.7% in the prior quarter. Including the special inventory charge, gross profit was $4.2 million for the quarter ended June 30, 2001.

During the September quarter, other operating expenses totaled $6.1 million. Other operating expenses represent startup costs associated with the Company s second wafer fabrication facility (wafer fab) and the Company s facility in China. Currently, the wafer fab is expected to commence operations in the December quarter, and construction of the China facility is expected to be complete in the fall of 2002.

Net income for the quarter was $1.5 million, or $0.01 per diluted share, based on a 14% tax rate, compared to net income of $17.7 million, or $0.10 per diluted share, for the second quarter of fiscal 2001, based on a 38% tax rate. This compares sequentially to a net loss of $7.5 million, or ($0.05) per share, excluding the special charge, for the first quarter of fiscal 2002, based on a 33% tax rate. Including the total special charge, net loss for the first quarter of fiscal 2002 was $33.5 million, or ($0.20) per share, based on a 0% tax rate.

Separately, the Company announced today that it expects to file an amended Form 10-Q for its fiscal quarter ended June 30, 2001 to reflect the recognition of an income tax benefit, following consultation with its independent auditors and further review of its deferred tax assets and liabilities relative to income tax carry-backs and carry-forwards. The net effect of the tax benefit is anticipated to lower the June quarterly loss by approximately $5 million to $6 million and lower the June quarterly loss per share by approximately $0.03 to $0.04. Sequential comparisons in today s announcement do not reflect the anticipated tax benefit.

Business Outlook And Financial Guidance The Company s believes that its backlog currently supports a range of revenues from $99 million to $103 million for the quarter ending December 31, 2001. Gross margin for the December quarter is currently expected to range from 34% to 36%. The projected decrease in gross margin is attributable to the opening of the Company s second wafer fab. Operating expenses in the December quarter, excluding other operating expenses associated with the Company s second wafer fab and its China facility, are currently expected to increase sequentially approximately 5%, due mainly to increased investments in the Company s R&D activities. Other operating expenses are anticipated to decrease to a range from $2.0 million to $3.0 million. The Company anticipates its tax rate will be approximately 14% for the quarter and the remainder of the year. Taking these factors into account, the Company currently expects earnings per share for the December 2001 quarter will be approximately $0.01 to $0.02 before charges related to the acquisition of RF Nitro Communications, Inc.

Near-term variables that could impact the Company s ability to sustain profitability include wafer fab capacity utilization, module product margin improvements, product mix and other items outside the control of the Company.

Comments From Management David Norbury, president and chief executive officer of RF Micro Devices, said, "We are very pleased to report our return to profitability in September, a full quarter ahead of original expectations. During the September quarter, we experienced increased demand from multiple handset customers across all major air interface standards. Our ability to respond quickly to that demand enabled us to beat our internal earnings and revenue estimates."

"We re excited about new handset platforms that are either beginning to ramp or are scheduled to ramp in subsequent quarters. We believe we are very well positioned to continue to grow in excess of the overall handset market. "We re also pleased to announce the acquisition of RF Nitro. We expect Gallium Nitride (GaN) will ultimately displace silicon in high-power applications such as base station power amplifiers. RF Nitro has assembled a world-class team of engineering talent, and we believe their process and design expertise will have an immediate impact on maintaining our technology leadership."

Dean Priddy, CFO and vice president of administration, stated, "I m particularly pleased to report the 930 basis-point increase in gross margins to 37 percent. The improved margins demonstrate our dedication - and the contribution of our supply chain - to achieving world-class cost targets and manufacturing yields."

Priddy continued, "I m also pleased that inventory control and cycle-time reduction initiatives are reflected positively on our balance sheet, with inventory turns improving to 5.4. The ability to respond quickly to changes in customer demand will help us continue to manage our business though all types of business environments."

RF Micro Devices, Inc., an ISO 9001-certified manufacturer, designs, develops, manufactures and markets proprietary radio frequency integrated circuits (RFICs) primarily for wireless communications products and applications such as cellular and PCS phones, base stations, wireless LANs, and cable television modems. The Company offers a broad array of products - including amplifiers, mixers, modulators/demodulators, and single-chip receivers, transmitters and transceivers - representing a substantial majority of the RFICs required in wireless subscriber equipment. The Company s strategy is to focus on wireless markets by offering a broad range of standard and custom-designed RFICs in order to position itself as a one-stop" solution for its customers RFIC needs. RF Micro Devices, Inc. is traded on the Nasdaq National Market under the symbol RFMD.

This press release contains forward-looking statements that relate to RF Micro Devices plans, objectives, estimates and goals. Words such as "expects," "anticipates," "intends," "plans," "projects," "believes," and "estimates," and variations of these words and similar expressions, identify these forward-looking statements. RF Micro Devices business is subject to numerous risks and uncertainties, including variability in quarterly operating results, the rate of growth and development of wireless markets, risks associated with the operation of wafer fabrication facilities, its ability to manage rapid growth and to attract and retain skilled personnel, variability in production yields, raw material availability, manufacturing capacity constraints, dependence on a limited number of customers and dependence on third parties. These and other risks and uncertainties, which are described in more detail in RF Micro Devices most recent Annual Report on Form 10-K 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. For more information about RFMD, please visit our website at www.rfmd.com.

Contact: RF Micro Devices, Greensboro Dean Priddy Tel: 336 931 7152 Doug DeLieto Tel: 336 931 7968 or At the Financial Relations Board General Contact: Rob Hyman Tel: 212/445-8000 Investor Contact: Nicole Engel Tel: 212/445-8000

Nicole Engel
Tel: 212/445-8000
Web site: http://www.rfmd.com
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