* RFMD Currently Expects December Quarterly Revenue Of Approximately $160 Million To $165 Million, And Anticipates Quarterly Earnings (Loss) Per Share Of ($0.02) To $0.00 On A GAAP Basis And $0.00 To $0.02 On A Pro Forma Basis
Revenue for the quarter was $149.1 million, a decrease of 8.8% versus revenue of $163.5 million for the corresponding quarter of fiscal 2004, and a sequential decrease of 10.1% versus revenue of $165.8 million for the quarter ended June 30, 2004. Consistent with the revised quarterly guidance provided by the Company on September 21, 2004, the quarterly revenue decline reflected weakness in the market for GSM/GPRS cellular handsets in Asia, offset partially by strength among certain top-tier handset manufacturers.
Gross profit for the quarter was $49.1 million, a decrease of 23.1% versus $63.8 million for the prior year period, and a sequential decrease of approximately 24.4% from $64.9 million for the quarter ended June 30, 2004. Gross profit margin decreased sequentially to 32.9%, versus 39.1% in the prior quarter and 39.0% in the corresponding quarter of fiscal 2004. The year-over- year decrease in gross profit margin was primarily attributable to lower volumes, and the sequential decrease in gross profit margin was primarily attributable to lower volumes and aggressive new product ramps.
Net loss in accordance with U.S. generally accepted accounting principles (GAAP) for the quarter ended September 30, 2004 was ($6.7) million, or ($0.04) per diluted share, compared with GAAP net income of $10.6 million, or $0.05 per diluted share, for the quarter ended September 30, 2003. This compares sequentially to GAAP net income of $3.0 million, or $0.02 per diluted share, for the prior quarter ended June 30, 2004.
In addition to reporting net (loss) income and net (loss) income per share in accordance with GAAP, RFMD separately reports these items on a non-GAAP basis, referred to as pro forma, in order to exclude the effect of certain non-recurring and non-cash items. For the purposes of this press release, all references to "pro forma" results reflect non-GAAP financial information. In the quarter ended September 30, 2004, pro forma results excluded approximately $3.6 million in non-cash expenses related primarily to the amortization of deferred stock-based compensation and the amortization of transaction-related intangibles.
After excluding these items, pro forma net loss for the quarter ended September 30, 2004 was ($3.0) million, or ($0.02) per diluted share. This compares with pro forma net income of $17.3 million, or $0.08 per diluted share, for the quarter ended September 30, 2003, and pro forma net income of $12.7 million, or $0.06 per share, for the quarter ended June 30, 2004.
In the quarter ended September 30, 2003, pro forma results excluded approximately $2.6 million in non-cash charges associated with the repurchase of 3.75% convertible subordinated notes and approximately $4.1 million in non- cash expenses related to the amortization of deferred stock-based compensation and the amortization of transaction-related intangibles. In the quarter ended June 30, 2004, pro forma results excluded $9.7 million in expenses, including an in-process R&D charge of approximately $6.2 million related to the acquisition of SiliconWave, as well as approximately $3.5 million in non-cash expenses related to the amortization of deferred stock-based compensation and the amortization of transaction-related intangibles. A reconciliation of the Company's GAAP financial results to pro forma financial results is provided in the financial statement portion of this release.
RF Micro Devices believes pro forma reporting provides useful supplemental information to the investment community and facilitates a better understanding of its results of operations. RF Micro Devices has chosen to provide this supplemental information to investors to enable them to perform additional comparisons of operating results and as a means to analyze its financial performance without the impact of certain non-cash expenses or unusual items that may obscure trends in the Company's underlying performance. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies.
Business Outlook And Financial Guidance
RF Micro Devices currently expects sequential quarterly revenue in the range of $160 million to $165 million in the fiscal 2005 third quarter ending December 2004. Additionally, the Company currently anticipates quarterly GAAP net income (loss) in the range of ($0.02) to $0.00 per share and quarterly pro forma net income in the range of $0.00 to $0.02 per share.
Comments From Management
Bob Bruggeworth, president and CEO of RF Micro Devices, said, "Although seasonally weak order flow in our primary market of handsets negatively impacted our September quarter, we were very pleased with the success of our diversification initiatives in new product segments. Most notably, we commenced production shipments of our POLARIS(TM) TOTAL RADIO(TM) cellular transceivers and began high-volume customer shipments for use in multiple wireless devices. As we have stated previously, the transceiver market doubles our potential market to over $2.5 billion. We currently have backlog to support greater than one-and-a-half million POLARIS shipments in the December quarter, which represents an upward revision of approximately 50% over previous guidance. We expect significant share gains in the transceiver market in calendar year 2005.
"We are very pleased to see our diversification strategy unfolding as planned. On the strength of our market leading position in PAs and next- generation air interface standards, we are achieving success in our new product initiatives. Our POLARIS products are ramping and our Bluetooth products are ramping. RF Micro Devices is uniquely positioned to capitalize on the growth in handsets and the proliferation of multiple radios protocols in mobile and portable wireless devices."
Dean Priddy, CFO and vice president of administration, said, "During the September quarter, the combination of reduced sales volume and aggressive new product ramps negatively impacted our quarterly gross margin. However, the Company is aggressively executing on margin improvement initiatives, and we are pleased to announce we achieved two significant margin improvement milestones during the quarter. First, we began ramping volume production of our first PA modules containing silicon control chips from Jazz Semiconductor, reaping the benefit of our investment in a silicon foundry. Second, we received customer qualification for our Beijing assembly operation, and we expect reduced-cost shipments from this facility will begin this quarter and will ramp over the next 12 months. We anticipate these and other initiatives, along with anticipated increases in sales volume, will allow us to significantly improve gross margin over the next 12 months.
"Our inventory levels increased in the September quarter, as we built inventory to support the POLARIS ramp and as some GSM sales to Asia did not materialize as planned. We currently anticipate our inventory levels will decline in the December quarter as POLARIS ramps and the environment in Asia continues to improve."
RF Micro Devices will conduct a conference call at 5:00 p.m. ET 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.fulldisclosure.com/ or http://www.rfmd.com/ (under Investor Info). The call will also be available live by dialing 303-205-0044, and a replay will be available by dialing (303) 590-3000 and entering pass code 110011439.
RF Micro Devices, Inc., an ISO 9001- and ISO 14001-certified manufacturer, designs, develops, manufactures and markets proprietary radio frequency integrated circuits (RFICs) for wireless communications products and applications. The Company is a leading supplier of power amplifiers, one of the most critical radio frequency (RF) components in cellular phones. The Company is also the leading manufacturer of GaAs HBT, which offers distinct advantages over other technologies for the manufacture of current- and next- generation power amplifiers. The Company's products are included primarily in cellular phones, base stations, wireless local area networks (WLANs), cable television modems and global positioning systems (GPS). The Company derives revenue from the sale of standard and custom-designed products. The Company offers a broad array of products including amplifiers, mixers, modulators/demodulators and single-chip transmitters, Bluetooth(R) products and receivers and transceivers that represent a substantial majority of the RFICs required in wireless subscriber equipment. The Company's goal is to be the premier supplier of low-cost, high-performance integrated circuits and solutions for applications that enable wireless connectivity. RF Micro Devices, Inc., is traded on the Nasdaq National Market under the symbol RFMD. For more information about RFMD, please visit