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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JULY 1, 2000
COMMISSION FILE NUMBER: 0-22511
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RF MICRO DEVICES, INC.
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(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
NORTH CAROLINA 56-1733461
--------------------------- ----------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
</TABLE>
7628 THORNDIKE ROAD
GREENSBORO, NORTH CAROLINA 27409-9421
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(Address of principal executive offices, including zip code)
(336) 664-1233
---------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
As of August 3, 2000, there were 80,573,889 shares of the registrant's common
stock outstanding.
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<PAGE> 2
RF MICRO DEVICES, INC. AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The accompanying condensed consolidated financial statements have been prepared
in conformity with generally accepted accounting principles. The preparation of
these financial statements requires management to make estimates and
assumptions, which could differ materially from the actual results. In addition,
certain information or footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed, or omitted, pursuant to the rules and regulations of the
Securities and Exchange Commission. In the opinion of management, the 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. The
results of operations for interim periods are not necessarily indicative of the
results that may be expected for a full year. These condensed consolidated
financial statements should be read in conjunction with the Company's audited
financial statements and notes thereto included in the Company's Form 10-K for
the year ended March 31, 2000.
The consolidated financial statements include the accounts of the Company and
its wholly owned subsidiaries. All significant intercompany accounts and
transactions have been eliminated in consolidation.
The Company uses a 52- or 53-week fiscal year ending on the Saturday closest to
March 31 of each year. The first fiscal quarter of each year ends on the
Saturday closest to June 30; however, in this report the Company's fiscal year
is described as ending on March 31 and the first quarter of each year is
described as ending on June 30.
The following condensed consolidated financial statements are included:
CONDENSED CONSOLIDATED STATEMENTS OF INCOME FOR THE THREE MONTHS ENDED JUNE
30, 2000 AND 1999
CONDENSED CONSOLIDATED BALANCE SHEETS AS OF JUNE 30, 2000 AND MARCH 31,
2000
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED
JUNE 30, 2000 AND 1999
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1
<PAGE> 3
RF MICRO DEVICES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
JUNE 30, 2000 JUNE 30, 1999
------------- -------------
<S> <C> <C>
Revenues:
Product sales............................................. $97,522 $61,881
Engineering revenue....................................... 684 167
------- -------
Total revenues.............................................. 98,206 62,048
Operating costs and expenses:
Cost of goods sold........................................ 47,642 35,645
Research and development.................................. 14,174 6,038
Marketing and selling..................................... 7,344 3,632
General and administrative................................ 3,719 1,907
------- -------
Total operating costs and expenses.......................... 72,879 47,222
------- -------
Income from operations...................................... 25,327 14,826
Other income (expense), net................................. 870 1,202
------- -------
Income before income taxes.................................. 26,197 16,028
------- -------
Income tax expense.......................................... 9,955 5,610
------- -------
Net income.................................................. $16,242 $10,418
======= =======
Earnings per share:
Basic..................................................... $ 0.20 $ 0.13
Diluted................................................... $ 0.19 $ 0.12
Shares used in per share calculation:
Basic..................................................... 80,339 78,920
Diluted................................................... 87,234 84,668
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements.
2
<PAGE> 4
RF MICRO DEVICES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
JUNE 30, MARCH 31,
2000 2000
(UNAUDITED)
----------- ---------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.............................. $ 21,188 $ 28,956
Short-term investments................................. 45,498 33,755
Accounts receivable, net............................... 56,179 61,163
Inventories............................................ 50,863 38,389
Current deferred tax asset............................. 7,122 5,771
Prepaid assets......................................... 1,313 472
Other current assets................................... 1,687 1,343
-------- --------
Total current assets.............................. 183,850 169,849
Property and equipment, net of accumulated depreciation of
$27,360 at June 30, 2000 and $21,702 at March 31, 2000.... 179,565 159,843
Related party technology licenses, net of amortization of
$579 at June 30, 2000 and $338 at March 31, 2000.......... 12,664 12,905
Long-term investments....................................... 3,475 --
Other assets................................................ 1,989 2,015
-------- --------
Total assets...................................... $381,543 $344,612
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable....................................... $ 21,883 $ 15,319
Accrued liabilities.................................... 8,688 7,726
Income taxes payable................................... 9,497 --
Current obligations under capital leases............... 4,587 4,495
-------- --------
Total current liabilities......................... 44,655 27,540
Obligations under capital leases, less current maturities... 7,003 8,203
Non-current deferred tax liability.......................... 7,022 5,716
-------- --------
Total liabilities................................. 58,680 41,459
Shareholders' equity:
Preferred stock, no par value; 5,000,000 shares
authorized; no shares issued and outstanding.......... -- --
Common stock, no par value; 150,000,000 shares
authorized; 80,506,055 and 80,104,316 shares issued
and outstanding at June 30, 2000 and March 31, 2000,
respectively.......................................... 230,873 229,275
Additional paid-in capital.................................. 26,019 26,019
Deferred compensation....................................... (8,236) (8,560)
Accumulated other comprehensive income, net of tax.......... 1,546 --
Retained earnings........................................... 72,661 56,419
-------- --------
Total shareholders' equity........................ 322,863 303,153
-------- --------
Total liabilities and shareholders' equity........ $381,543 $344,612
======== ========
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements.
3
<PAGE> 5
RF MICRO DEVICES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
JUNE 30, JUNE 30,
2000 1999
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income.................................................. $16,242 $ 10,418
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation.............................................. 5,658 2,800
Amortization.............................................. 26 --
Amortization of related party technology license.......... 241 54
Amortization of deferred compensation..................... 324 15
Change in operating assets and liabilities:
Accounts receivable.................................... 4,984 (9,297)
Inventories............................................ (12,474) (1,225)
Current deferred tax asset............................. (1,343) (2)
Prepaid expenses....................................... (841) (157)
Other assets........................................... 6 171
Accounts payable....................................... 6,564 2,168
Accrued liabilities.................................... 962 (1,468)
Income taxes payable................................... 9,497 2,435
------- --------
Net cash provided by operating activities................... 29,846 5,912
Cash flows from investing activities:
Purchase of capital equipment/leasehold improvements... (25,380) (27,821)
Proceeds from securities held-to-maturity.............. 8,905 --
Purchase of securities held-to-maturity................ (5,460) --
Purchase of securities available for sale.............. (16,169) --
------- --------
Net cash used in investing activities....................... (38,104) (27,821)
Cash flows from financing activities:
Proceeds from exercise of options...................... 1,598 294
Repayment of capital lease obligations................. (1,108) (1,000)
------- --------
Net cash provided by/(used in) financing activities......... 490 (706)
------- --------
Net decrease in cash and cash equivalents................... (7,768) (22,615)
Cash and cash equivalents at the beginning of the period.... 28,956 147,545
------- --------
Cash and cash equivalents at the end of the period.......... $21,188 $124,930
======= ========
Noncash investing and financing activities:
Available-for-sale investment equity change, net of tax..... $ 1,546 --
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements.
4
<PAGE> 6
RF MICRO DEVICES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. STOCK SPLIT
On August 18, 1999, the Company effected a two-for-one stock split in the form
of a 100% share dividend payable to shareholders of record on August 2, 1999.
All earnings per share and share count information have been restated
retroactively to reflect the impact of the stock split.
2. EARNINGS PER SHARE
The weighted average shares used in the calculation of diluted earnings per
share represent the weighted average shares outstanding plus the dilutive effect
of outstanding stock options, warrants, and other potentially dilutive common
shares outstanding. The following table sets forth the computation of basic and
diluted earnings per share (in thousands, except per share data):
<TABLE>
<CAPTION>
THREE MONTHS ENDED
-----------------------------
JUNE 30, 2000 JUNE 30, 1999
------------- -------------
<S> <C> <C>
Numerator for basic and diluted earnings per share:
Net income.................................................. $16,242 $10,418
======= =======
Denominator for basic earnings per share -- weighted average
shares.................................................... 80,339 78,920
Effect of dilutive securities:
Stock options and warrants.................................. 6,895 5,748
------- -------
Denominator for diluted earnings per share -- adjusted
weighted average shares and assumed conversions........... 87,234 84,668
------- -------
Basic earnings per share.................................... $ 0.20 $ 0.13
======= =======
Diluted earnings per share.................................. $ 0.19 $ 0.12
======= =======
</TABLE>
Options to purchase 144,825 and 122,500 shares of common stock were outstanding
during the quarters ended June 30, 2000 and 1999, respectively, but were not
included in the computation of diluted earnings per share because the exercise
price of the options was greater than the average market price of the common
shares and, therefore, the effect would have been anti-dilutive.
3. INVESTMENTS
Investments available-for-sale at June 30, 2000 consisted of a marketable equity
security and U.S. Agency Medium Term Notes. The U.S. Agency Medium Term Notes
have original maturities of less than one year when purchased.
Available-for-sale securities are carried at fair value, with the unrealized
gains and losses, net of tax, reported as a separate component of shareholders'
equity.
Investments held-to-maturity at June 30, 2000 consisted of U.S. Agency Medium
Term Notes. The investments held-to-maturity have original maturities of less
than one year when purchased. Management determines the appropriate
classification of securities at the time of purchase and reevaluates such
designation as of each balance sheet date. Debt securities are classified as
held-to-maturity when the Company has the positive intent and ability to hold
the securities to maturity. Held-to-maturity securities are stated at amortized
cost, adjusted for amortization of premiums and accumulation of discounts to
maturity.
The amortized cost of U.S. Agency Medium Term Notes classified as
held-to-maturity or available-for-sale is adjusted for amortization of premiums
and accumulation of discounts to maturity. Such amortization is included in
interest income from investments.
5
<PAGE> 7
RF MICRO DEVICES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)
The following is a summary of available-for-sale and held-to-maturity securities
at June 30, 2000 and March 31, 2000 (in thousands):
<TABLE>
<CAPTION>
AVAILABLE-FOR-SALE SECURITIES
----------------------------------------------
GROSS GROSS
UNREALIZED UNREALIZED ESTIMATED
COST GAINS LOSSES FAIR VALUE
------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
JUNE 30, 2000
U.S. Agency Term Notes......................... $15,209 $ -- $(22) $15,187
Equity Securities.............................. 960 2,515 -- 3,475
------- ------ ---- -------
$16,169 $2,515 $(22) $18,662
======= ====== ==== =======
</TABLE>
The Company had no available-for-sale securities on March 31, 2000.
<TABLE>
<CAPTION>
HELD-TO-MATURITY SECURITIES
----------------------------------------------
GROSS GROSS
UNREALIZED UNREALIZED ESTIMATED
COST GAINS LOSSES FAIR VALUE
------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
JUNE 30, 2000
U.S. Agency Medium Term Notes.................. $30,311 $-- $(47) $30,264
======= == ==== =======
MARCH 31, 2000
U.S. Agency Medium Term Notes.................. $33,755 $3 $(22) $33,736
======= == ==== =======
</TABLE>
During the quarters ended June 30, 2000 and June 30, 1999, no debt or marketable
equity securities were sold. The net adjustment to unrealized holding gains
(losses) on available-for-sale securities included as a separate component of
shareholders' equity totaled $1,546,000 for the quarter. The estimated fair
value of held-to-maturity and available-for-sale securities is based on the
prevailing market values at June 30, 2000 and March 31, 2000.
4. 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):
<TABLE>
<CAPTION>
JUNE 30, 2000 MARCH 31, 2000
------------- --------------
<S> <C> <C>
Raw materials............................................ $11,497 $ 7,851
Work in process.......................................... 23,617 26,560
Finished goods........................................... 29,849 15,092
------- --------
64,963 49,503
Inventory allowances..................................... (14,100) (11,114)
------- --------
Total inventory................................ $50,863 $ 38,389
======= ========
</TABLE>
6
<PAGE> 8
RF MICRO DEVICES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)
5. COMPREHENSIVE INCOME
Accumulated other comprehensive income for the Company consists entirely of
accumulated unrealized gains on marketable securities and is a separate
component of shareholders' equity.
The components of comprehensive income, net of tax, for the three months ended
June 30, 2000 and 1999 are as follows (in thousands):
<TABLE>
<CAPTION>
THREE MONTHS ENDED
-----------------------------
JUNE 30, 2000 JUNE 30, 1999
------------- -------------
<S> <C> <C>
Net income.................................................. $16,242 $10,418
Accumulated other comprehensive income:
Unrealized gains on marketable securities.............. 1,546 --
------- -------
Comprehensive income........................................ $17,788 $10,418
======= =======
</TABLE>
6. SUBSEQUENT EVENTS
On July 25, 2000, the Company announced a two-for-one stock split in the form of
a 100% share dividend payable to shareholders of record on August 8, 2000 to be
mailed or delivered on or about August 25, 2000.
On August 8, 2000, the Company announced that it had agreed to privately place
$250 million aggregate principal amount of 3.75% convertible subordinated notes
due 2005. The notes will be convertible into the Company's common stock at a
conversion price of $90.17 per share. The conversion price will be adjusted to
$45.085 per share effective at the opening of business on August 28, 2000 to
reflect the 2-for-1 common stock split described above. We also granted the
initial purchasers of the notes a 30-day option to purchase an additional $50
million principal amount of the notes. On August 11, 2000, the Company completed
the private placement of $300 million aggregate principal amount of the notes.
The initial purchasers of the notes exercised their option to purchase an
additional $50 million principal amount of the notes. We intend to use the net
proceeds of the offering for general corporate purposes, including capital
expenditures and working capital. In addition, we may use a portion of the net
proceeds to acquire or invest in complementary businesses, products or
technologies if the opportunity arises.
7
<PAGE> 9
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS
This Form 10-Q contains forward-looking statements that relate to our plans,
objectives, estimates and goals. Words such as "expects," "anticipates,"
"intends," "plans," "believes," and "estimates," and variations of such words
and similar expressions, identify such forward-looking statements. The Company's
business is subject to numerous risks and uncertainties, including probable
variability in our quarterly operating results, risk associated with our
operation of a wafer fabrication facility and construction of a second facility,
the ability to manage rapid growth, variability in production yields,
constraints in our manufacturing capacity, 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 the Company's Annual Report
on Form 10-K filed with the Securities and Exchange Commission, could cause the
actual results and developments to be materially different from those expressed
or implied by any of these forward-looking statements.
RESULTS OF OPERATIONS
The following table sets forth our consolidated statement of operations data
expressed as a percentage of total revenues for the periods indicated:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
JUNE 30, 2000 JUNE 30, 1999
------------- -------------
<S> <C> <C>
Revenues................................................... 100.0% 100.0%
Operating costs and expenses
Cost of goods sold....................................... 48.5 57.4
Research and development................................. 14.4 9.7
Marketing and selling.................................... 7.5 5.9
General and administrative............................... 3.8 3.1
----- -----
Total operating costs and expense.......................... 74.2 76.1
Income from operations..................................... 25.8 23.9
Other income (expense), net................................ 0.9 1.9
----- -----
Income before income taxes................................. 26.7 25.8
Income tax expense......................................... (10.1) (9.0)
----- -----
Net income................................................. 16.6% 16.8%
===== =====
</TABLE>
REVENUES
Revenues increased 58.3% to $98.2 million for the first quarter ended June 30,
2000 from $62.0 million for the first quarter ended June 30, 1999. The increase
in year over year revenues was due primarily to strong growth in the GaAs HBT
product line (a 69.1% increase over prior year) as demand from the handset and
broadband industries increased. As a result, sales increased to the Company's
largest customer and we increased our overall customer base, which included
significant sales to one new customer.
International shipments accounted for $58.8 million, or 59.9% of revenues in the
first quarter of fiscal 2001, compared to $26.0 million, or 42.0%, in the first
quarter of fiscal 2000. One sales representative firm, Jittek, accounted for
7.0% of sales during the first quarter of fiscal 2001 and 22.5% of sales during
the first quarter of fiscal 2000. Sales to customers located in South Korea
totaled $6.9 million, or 7.0% of revenues for the first quarter of fiscal 2001,
compared to $14.4 million, or 23.2% of revenues, for the first quarter of fiscal
2000. Shipments to this market may continue to decrease as the South Korean
market remains unstable.
GROSS PROFIT
The gross profit margin for the three months ended June 30, 2000 increased 91.7%
to $50.6 million or 51.5% of sales compared to $26.4 million or 42.6% of sales
in the prior year. The increase in the gross profit margin was
8
<PAGE> 10
the result of cost savings, which outpaced declining average selling prices.
Cost savings were attributable to an increase in the percentage of revenues
derived from lower cost output from our GaAs HBT wafer fabrication facility and
lower costs on purchased wafers under supply agreements providing for annual
price reductions.
We have historically experienced significant fluctuations in gross profit
margins, which has caused fluctuations in our quarterly operating results, and
we cannot be certain operating results will not be similarly affected in the
future. We expect overall average selling prices to continue to decline, but we
believe differences in product mix and introductions of new products will help
offset the price declines in more mature products. Additionally, we should
benefit from cost savings derived from an increasing percentage of GaAs HBT
products fabricated at our wafer fabrication facility. However, the downward
pressure on overall average selling prices, along with start-up costs related to
new products and our new facilities may adversely affect margins and offset
gains expected from the manufacturing cost reductions.
RESEARCH AND DEVELOPMENT
Research and development expenses for the three months ended June 30, 2000
increased 136.7% to $14.2 million or 14.4% of revenues compared to $6.0 million
or 9.7% of revenues for the three months ended June 30, 1999. The increase was
primarily attributable to increased headcount and related expenses including
salaries and benefits, increased development wafers and mask sets and other
general expenses. We plan to continue to make substantial investments in
research and development and expect that such expenses will continue to increase
at least in absolute dollar amounts in future periods.
MARKETING AND SELLING
Marketing and selling expenses for the first quarter of fiscal 2001 were $7.3
million, compared to $3.6 million for the first quarter of fiscal 2000, an
increase of 102.8%. This increase was primarily attributable to increased
salaries and benefits related to a higher headcount and increased commission
expense as a result of higher sales. Headcount increased as a result of the
Company conducting a greater portion of the sales and marketing efforts
in-house. Marketing and selling expenses as a percentage of revenue for the
three months ended June 30, 2000, increased to 7.5% from 5.9% in the prior year.
We plan to continue to make investments in marketing and selling and expect that
such expenses will continue to increase in absolute dollar amounts in future
periods.
GENERAL AND ADMINISTRATIVE
General and administrative expenses for the three months ended June 30, 2000
were $3.7 million or 3.8% of revenues compared to $1.9 million or 3.1% of
revenues for the three months ended June 30, 1999, an increase of 94.7%. The
increase was primarily attributable to increased salaries and benefits related
to a higher headcount, and increased legal and accounting expenses associated
with the unconsummated March 2000 convertible debt offering.
OTHER INCOME (EXPENSE), NET
For the quarter ended June 30, 2000, other income (expense), net, was $0.9
million compared to $1.2 million in the prior year. The decrease in other income
is attributable to a lower cash balance resulting in lower interest income.
INCOME TAX
The effective tax rate for the quarter ended June 30, 2000 was 38.0% compared to
35.0% for the quarter ended June 30, 1999. The effective rate in fiscal 2001 was
less than the combined federal and state statutory rate of approximately 40.0%
due to the benefit of tax credits.
9
<PAGE> 11
LIQUIDITY AND CAPITAL RESOURCES
We have funded our operations to date through sales of equity and debt
securities, bank borrowings, capital equipment leases and revenues from product
sales. Through public offerings, the Company raised approximately $171.0
million, net of offering expenses. As of June 30, 2000, working capital was
$139.2 million, including $66.7 million in cash and cash equivalents, compared
to working capital at March 31, 2000 of $142.3 million. Operating activities for
the first quarter of fiscal 2001 generated $29.8 million in cash compared to
$5.9 million in the first quarter of fiscal 2000. This increase over the prior
year's first quarter was primarily attributable to an increase in net income of
$5.8 million, cash provided by a decrease in accounts receivable of $5.0 million
compared to cash used due to an increase in accounts receivable of $9.3 million
and increases in cash provided by accounts payable and income taxes payable of
$4.4 million and $7.1 million, respectively. The increase in cash provided by
accounts payable was due to a change in vendor payment terms and the increase in
cash provided by income taxes payable was the result of the increase in net
income and the increase in the effective tax rate. Partially offsetting the
overall increase in cash provided from operating activities was an increase in
cash used for inventory of $11.2 million. Inventory increased as a result of
planned inventory build intended to facilitate meeting delivery schedules.
Cash used in investing activities for the three months ended June 30, 2000 was
$38.1 million compared to $27.8 million in the prior year. The net purchase of
investment securities of $12.7 million accounted for the increase. Other uses of
cash included the purchase of capital equipment/leasehold improvements of $25.4
million, primarily for use in the testing and wafer fabrication facilities.
Cash provided by financing activities for the three months ended June 30, 2000
was $0.5 million compared to cash used of $0.7 million for the three months
ended June 30, 1999. The improvement over the prior year was due to increased
proceeds from the exercise of stock options.
At June 30, 2000, the Company had long-term capital commitments of approximately
$78.0 million, consisting of approximately $6.0 million for the expansion of our
first wafer fabrication facility, approximately $22.1 million for the second
wafer fabrication construction project, approximately $29.2 million for the MBE
facility expansion, approximately $13.7 million for test and packaging
facilities and the remainder for general corporate requirements. We expect to
fund these commitments through a combination of cash on hand, capital leases and
other forms of financing. On August 9, 2000, the Company executed an agreement
to provide for the sale leaseback of our corporate headquarters building. This
transaction is expected to be completed during the second quarter of fiscal 2001
and to generate approximately $13.0 million in cash. On August 8, 2000, the
Company announced that it had agreed to privately place $250.0 million aggregate
principal amount of 3.75% convertible subordinated notes due 2005. The notes
will be convertible into the Company's common stock at a conversion price of
$90.17 per share. The conversion price will be adjusted to $45.085 per share
effective at the opening of business on August 28, 2000 to reflect the 2-for-1
common stock split announced on July 25, 2000. We also granted the initial
purchasers of the notes a 30-day option to purchase an additional $50.0 million
principal amount of the notes. On August 11, 2000, the Company completed the
private placement of $300.0 million aggregate principal amount of the notes. The
initial purchasers of the notes exercised their option to purchase an additional
$50.0 million principal amount of the notes. We intend to use the net proceeds
of the offering for general corporate purposes, including capital expenditures
and working capital. In addition, we may use a portion of the net proceeds to
acquire or invest in complementary businesses, products or technologies if the
opportunity arises. Our future capital requirements may differ materially from
those currently anticipated and will depend on many factors, including, but not
limited to, market acceptance of our products, volume pricing concessions,
capital improvements to new and existing facilities, technological advances and
our relationships with suppliers and customers. We believe our cash requirements
will be adequately met from the combination of the debt offering and normal
operating results during fiscal 2001. If existing resources and cash from
operations are not sufficient to meet our future requirements, we may seek
additional debt or equity financing or additional credit facilities. We cannot
be sure that any additional financing will not be dilutive to holders of our
common stock. Also, we cannot be sure that additional equity or debt financing,
if required, will be available on favorable terms.
In addition, the Company also has a synthetic lease arrangement to provide up to
$100.0 million in financing for our new wafer fabrication facility. As of June
30, 2000, commitments against this lease were $46.3 million.
10
<PAGE> 12
PART II -- OTHER INFORMATION
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
<TABLE>
<S> <C> <C>
Exhibit 3.1 -- Amendment to Articles of Incorporation
Exhibit 10.1 -- First Amendment to Certain Operative Agreements (RFMD Real
Estate Trust No. 1999-1) dated as of April 17, 2000 among RF
Micro Devices, Inc., as the Construction Agent and as the
Lessee, First Security Bank, National Association, not
individually, except as expressly stated herein, but solely
as the Owner Trustee under the RFMD Real Estate Trust
1999-1, the Various Banks and Other Lending Institutions
which are Parties Thereto from Time to Time, as the Holders,
The Various Banks and Other Lending Institutions which are
Parties Thereto from Time to Time, as the Lenders, First
Union National Bank, as the Agent for the Lenders and
respecting the Security Documents, as the Agent for the
Lenders and the Holders, to the extent of their interests
and Credit Suisse First Boston, as Syndication Agent
Exhibit 27.1 -- Financial Data Schedule
</TABLE>
(b) Reports on Form 8-K
During the quarter ended June 30, 2000, the Company filed no reports on Form 8-K
11
<PAGE> 13
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
RF Micro Devices, Inc.
Dated: August 11, 2000
/s/ David A. Norbury
--------------------------------------
DAVID A. NORBURY
President and Chief Executive Officer
Dated: August 11, 2000
/s/ William A. Priddy, Jr.
--------------------------------------
WILLIAM A. PRIDDY, JR.
Vice President, Finance and
Administration
and Chief Financial Officer
(Principal Financial Officer)
12
