As Filed with the Securities and Exchange Commission on November 7, 2000
Registration No. 333 - _____
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
--------------------------
RF MICRO DEVICES, INC.
(Exact name of registrant as specified in its charter)
North Carolina 56-1733461
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
7628 Thorndike Road
Greensboro, North Carolina 27409
(336) 664-1233
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
David A. Norbury
President and Chief Executive Officer
RF Micro Devices, Inc.
7628 Thorndike Road
Greensboro, North Carolina 27409
(336) 664-1233
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copy to:
Jeffrey C. Howland, Esq.
Womble Carlyle Sandridge & Rice, PLLC
BB&T Financial Center
Winston-Salem, NC 27101
(336) 721-3516
------------------------
Approximate date of commencement of proposed sale to the public: At such time or
times after the effective date of this Registration Statement as the selling
securityholders shall determine.
If any of the securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration number of the earlier effective registration
statement for the same offering. [ ] ________
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration number of the earlier effective registration statement for the same
offering. [ ] ________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
Calculation of Registration Fee
<PAGE>
<TABLE>
<CAPTION>
Proposed maximum Proposed maximum
Title of each class of Amount offering aggregate
securities to be registered to be registered price per unit (1) offering price (1) Amount of registration fee
--------------------------- ---------------- ------------------ ------------------ --------------------------
<S> <C> <C> <C> <C>
3.75% Convertible
Subordinated Notes due 2005 $300,000,000 72.625% $217,875,000 $57,519.00
Common Stock, no par value 6,654,097(2) (2) (2) (3)
</TABLE>
[FN]
(1) Estimated solely for purposes of calculating the registration fee, pursuant
to Rule 457(c), based upon the average of the bid and asked prices of the
Convertible Subordinated Notes due 2005 on the Portal Market on October 31,
2000.
(2) Includes 6,654,097 shares of common stock issuable upon conversion of the
notes at the conversion price of $45.085 per share of common stock.
Pursuant to Rule 416 under the Securities Act, such number of shares of
common stock registered hereby shall include an indeterminate number of
shares of common stock that may be issued in connection with a stock split,
stock dividend, recapitalization or similar event.
(3) Pursuant to Rule 457(i), there is no additional filing fee with respect to
the shares of common stock issuable upon conversion of the notes because no
additional consideration will be received in connection with the exercise
of the conversion privilege.
</FN>
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to such Section 8(a),
may determine.
<PAGE>
SUBJECT TO COMPLETION, DATED NOVEMBER 7, 2000
THE INFORMATION IN THIS PRELIMINARY PROSPECTUS IS NOT COMPLETE AND MAY BE
CHANGED. THESE SECURITIES MAY NOT BE SOLD UNTIL THE REGISTRATION STATEMENT FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PRELIMINARY
PROSPECTUS IS NOT AN OFFER TO SELL NOR DOES IT SEEK AN OFFER TO BUY THESE
SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
PROSPECTUS
$300,000,000
[RFMD LOGO]
3.75% CONVERTIBLE SUBORDINATED NOTES DUE 2005 AND
THE COMMON STOCK ISSUABLE UPON CONVERSION OF THE NOTES
We issued the notes in a private placement in August 2000. This prospectus
will be used by selling securityholders to resell their notes and the common
stock issuable upon conversion of their notes.
The notes are convertible, at the option of the holder, at any time on or
prior to maturity into shares of our common stock. The notes are convertible at
a conversion price of $45.085 per share as adjusted for the 2-for-1 common stock
split effected August 28, 2000, which is equal to 22.18 shares per $1,000
principal amount of notes, subject to adjustment. We will pay interest on the
notes on February 15 and August 15 of each year, beginning February 15, 2001.
The notes will mature on August 15, 2005, unless earlier converted or redeemed.
We may redeem some or all of the notes at any time before August 20, 2003 at
a redemption price of $1,000 per $1,000 principal amount of notes, plus accrued
and unpaid interest, if any, to the redemption date, if the closing price of our
common stock has exceeded 150% of the conversion price then in effect for at
least 20 trading days within a period of 30 consecutive trading days ending on
the trading day before the date of mailing of the provisional redemption notice.
We will make an additional payment in cash or common stock with respect to the
notes called for provisional redemption in an amount equal to $112.50 per $1,000
principal amount of notes, less the amount of any interest actually paid on the
notes before the date of redemption. We may redeem some or all of the notes at
any time on or after August 20, 2003 at the redemption prices described in this
prospectus.
Our common stock is quoted on the Nasdaq National Market under the symbol
"RFMD." On November 6, 2000, the last reported sale price of the common stock on
the Nasdaq National Market was $24.88 per share.
INVESTING IN THE SECURITIES OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK. SEE
"RISK FACTORS" BEGINNING ON PAGE 6.
THE SECURITIES AND EXCHANGE COMMISSION AND STATE SECURITIES REGULATORS HAVE NOT
APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS
TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
________ __, 2000
<PAGE>
TABLE OF CONTENTS
<PAGE>
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS. WE
HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION THAT IS DIFFERENT. WE
ARE OFFERING TO SELL AND SEEKING OFFERS TO BUY SHARES OF OUR COMMON STOCK ONLY
IN JURISDICTIONS WHERE OFFERS AND SALES ARE PERMITTED. THE INFORMATION CONTAINED
IN THIS PROSPECTUS IS ACCURATE ONLY AS OF THE DATE OF THIS PROSPECTUS,
REGARDLESS OF THE TIME OF DELIVERY OF THIS PROSPECTUS OR ANY SALE OF OUR COMMON
STOCK.
WHERE YOU CAN FIND MORE INFORMATION
We file reports, proxy statements and other information with the Commission,
in accordance with the Securities Exchange Act of 1934. You may read and copy
our reports, proxy statements and other information filed by us at the public
reference facilities of the Commission at Room 1024, Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the Commission's Regional Offices;
7 World Trade Center, 13th Floor, New York, New York 10048. Copies of such
materials can be obtained at prescribed rates from the Public Reference Section
of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549. Please call
the Commission at 1-800-SEC-0330 for further information about the public
reference rooms. Our reports, proxy statements and other information filed with
the Commission are available to the public over the Internet at the Commission's
World Wide Web site at http://www.sec.gov.
The SEC allows us to "incorporate by reference" the information we file with
them, which means that we can disclose important information to you by referring
you to those document that we have previously filed with the SEC or documents
that we will file with the SEC in the future. The information incorporated by
reference is considered to be part of this offering, and later information that
we file with the SEC will automatically update and supersede this information.
We incorporate by reference the documents listed below into this prospectus, and
any future filings made by us with the SEC under Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act, until our offering is complete. The documents we
incorporate by reference are:
1. Our Annual Report on Form 10-K for the fiscal year ended March 25, 2000;
2. Our Quarterly Report on Form 10-Q for the fiscal quarter ended July 1,
2000;
3. Our Current Reports on Form 8-K as filed with the SEC on July 26, 2000,
August 8, 2000 and August 11, 2000; and
4. The description of our common stock contained in our registration
statement on Form 8-A under the Exchange Act as filed with the SEC on May
2, 1997.
You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address and number: RF Micro Devices, Inc., 7628
Thorndike Road, Greensboro, North Carolina 27409; telephone number (336)
664-1233.
FORWARD-LOOKING STATEMENTS
This prospectus, including the sections entitled "Summary" and "Risk
Factors," contains forward-looking statements. These statements relate to future
events or our future financial performance, and involve known and unknown risks,
uncertainties, and other factors that may cause our actual results, levels of
activity, performance or achievements to be materially different from any future
results, levels of activity, performance or achievements expressed or implied by
these forward-looking statements. These risks and other factors include, among
other things, those listed under "Risk Factors" and elsewhere in this
prospectus. In some cases, you can identify forward-looking statements by
terminology such as "may," "will," "should," "expects," "intends," "plans,"
"anticipates," "believes," "estimates," "predicts," "potential," "continue," or
the negative of these terms or other comparable terminology. These statements
are only predictions. Actual events or results may differ materially. In
evaluating these statements, you should specifically consider various factors,
including the risks outlined under "Risk Factors." These factors may cause our
actual results to differ materially from any forward-looking statement.
Although we believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, levels of
activity, performance or achievements. We are under no duty to update any of the
forward-looking statements after the date of this prospectus.
<PAGE>
SUMMARY
This summary highlights information contained elsewhere or incorporated by
reference in this prospectus. You should read the entire prospectus carefully,
including the incorporated financial statements and related notes and the risks
of investing in our securities discussed under "Risk Factors," before making an
investment.
Company Overview
We design, develop, manufacture and market radio frequency integrated
circuits, or RFICs, for rapidly growing wireless communications products and
applications. Our products are included in cellular and PCS phones, cordless
phones, wireless local area networks, wireless local loop handsets, industrial
radios, wireless security systems and remote meter readers. The majority of our
revenue is derived from sales of RFICs designed for cellular and PCS phones.
We offer a broad array of products -- including amplifiers, mixers,
modulators/demodulators and single chip transmitters, receivers and transceivers
-- that represent a substantial majority of the RFICs required in wireless
subscriber equipment. These RFICs perform the transmit and receive functions
that are critical to a phone's performance.
We currently design products using multiple semiconductor process
technologies. These include gallium arsenide heterojunction bipolar, silicon
bipolar, silicon BiCMOS, silicon germanium and gallium arsenide MESFET. We
also recently announced that we intend to develop and manufacture integrated
circuits utilizing indium phosphide. Generally speaking, gallium arsenide-based
products offer better electrical performance while silicon-based products are
less expensive. Original equipment manufacturers, or OEMs, try to maximize
tradeoffs between performance and cost. Our approach to using multiple
semiconductor process technologies allows us to offer customers products that
fulfill their performance, cost and time-to-market requirements. We call this
approach to business Optimum Technology Matching(R).
We design most of our GaAs products using a type of transistor called a
heterojunction bipolar transistor or HBT. We believe that our GaAs HBT RFICs
have the following advantages:
o Linearity: GaAs HBT RFICs exhibit good linearity, which means they can
amplify weak signals with minimal signal distortion. As a result, our
customers can design phones with clearer reception.
o Efficiency: Our GaAs HBT RFICs are efficient, which means they use less
power than competing products to transmit the same signal strength. As a
result, our customers can design phones with improved battery life and
increased talk time.
o Size: Because our GaAs HBT RFICs are small they are relatively
inexpensive to manufacture. As a result, we believe we offer our
customers price competitive products.
Because of the importance of design to many of our parts and the strength of
our GaAs HBT technology, we are a single-sourced supplier to many customers. Our
products are purchased by leading OEMs such as Nokia Mobile Phones Ltd., LG
Information & Communications, Ltd., Samsung Electronics Co., Ltd, Motorola,
Inc., NEC Corp., Kyocera America, Inc. and Ericsson Mobile Communications.
TRW Inc., which is our largest shareholder, has granted us a license (in
exchange for shares of our common stock) to use its GaAs HBT process to design
and manufacture products for commercial wireless applications. TRW manufactured
all of our GaAs HBT products before September 1998. We now manufacture the
majority of our GaAs HBT products under this license at our own manufacturing
facility, but we will continue to purchase GaAs HBT products from TRW at least
until December 31, 2000. We believe TRW beneficially owns 23.8 million shares or
about 14.9% of our common stock.
We were incorporated as a North Carolina corporation in 1991. Our principal
executive offices are located at 7628 Thorndike Road, Greensboro, North
Carolina, 27409-9421, and our telephone number is (336) 664-1233.
<PAGE>
The Offering
The following is a brief summary of some of the terms of the notes offered for
resale in this prospectus. For a more complete description of the terms of the
notes, see "Description of Notes" in this prospectus.
Securities Offered.................... $300,000,000 principal amount of 3.75%
Convertible Subordinated Notes Due
August 15, 2005.
Interest.............................. The notes will bear interest at an
annual rate of 3.75%, subject to
increases described under
"Registration Rights" below. Interest
is payable on February 15 and
August 15 of each year, beginning
February 15, 2001.
Maturity Date......................... August 15, 2005.
Conversion Rights..................... The notes are convertible at any time
prior to maturity into shares of our
common stock at a conversion price of
$45.085 per share, which is equal to
a conversion rate of 22.18 shares per
$1,000 principal amount of notes.
The conversion rate is subject to
adjustment.
Provisional
Redemption............................ We may redeem the notes, in whole or
in part, at any time before August
20, 2003, at a redemption price equal
to $1,000 per $1,000 principal
amount of notes to be redeemed plus
accrued and unpaid interest, if any,
to the date of redemption if (a) the
closing price of our common stock has
exceeded 150% of the conversion price
then in effect for at least 20
trading days within a period of 30
consecutive trading days ending on the
trading day before the date of mailing
of the provisional redemption
notice, and (b) the shelf registration
statement covering resales of the
notes and the common stock issuable
upon conversion of the notes is
effective and available for use and is
expected to remain effective and
available for use for the 30 days
following the provisional redemption
date, unless registration is no longer
required. Upon any provisional
redemption, we will make an additional
payment in cash or common stock
with respect to the notes called for
redemption in an amount equal to
$112.50 per $1,000 principal amount of
notes, less the amount of any
interest actually paid on the note
before the date of redemption. We will
be obligated to make this additional
payment on all notes called for
provisional redemption, including any
notes converted after the notice
date and before the provisional
redemption date.
Optional Redemption................... We may redeem the notes on or after
August 20, 2003 at the redemption
prices set forth in this offering
circular.
Sinking Fund.......................... None.
Change in Control..................... Upon a change in control, you may
require us to purchase your notes at
100% of the principal amount of the
notes plus accrued and unpaid interest
to, but excluding, the purchase date.
We may not have sufficient funds to
pay the purchase price for all duly
tendered notes upon a change in
control.
Subordination......................... The notes will be general unsecured
obligations of RFMD. The notes will be
subordinated in right of payment to
all existing and future senior
indebtedness and structurally
subordinated to the indebtedness and
other liabilities of our subsidiaries.
As of September 30, 2000 we had
secured obligations under our existing
lease facility of up to approximately
$80.2 million that would constitute
senior indebtedness for purposes of
the indenture, while our subsidiaries
had no outstanding indebtedness or
other liabilities. We are not
prohibited from incurring senior
indebtedness or other debt under the
indenture.
Use of Proceeds....................... We will not receive any of the
proceeds of the resale by the selling
securityholders of the notes or the
common stock into which they may be
converted.
Trading............................... The notes are eligible for trading in
PORTAL. However, we can give no
assurance as to the liquidity of or
trading market for the notes. Our
common stock is traded on the Nasdaq
National Market under the symbol
"RFMD."
Registration Rights................... We agreed to file this shelf
registration statement with the SEC
for resale of the notes and the common
stock issuable upon conversion of the
notes. We have agreed to keep the
shelf registration statement effective
for two years after filing. If we do
not comply with these registration
obligations, we will be required to
pay liquidated damages to the holders
of the notes or the common stock
issuable upon conversion.
Risk Factors.......................... See "Risk Factors" and the other
information in this prospectus for a
discussion of the factors you should
carefully consider before deciding to
invest in the notes or the common
stock into which the notes are
convertible.
<PAGE>
RISK FACTORS
You should carefully consider the risks described below before making an
investment decision. The risks and uncertainties described below are not the
only ones we face. Additional risks and uncertainties not presently known to us
or that we currently deem immaterial may also impair our business operations.
If any of the following risks actually occurs, our business, financial
condition or results of future operations could be materially and adversely
affected. In such case, the trading price of our common stock could decline, and
you could lose all or part of your investment.
This prospectus also contains forward-looking statements that involve risks
and uncertainties. Our actual results could differ materially from those
anticipated in these forward-looking statements as a result of certain factors,
including the risks faced by us described below and elsewhere in this
prospectus.
OUR OPERATING RESULTS FLUCTUATE SIGNIFICANTLY AND WE MAY NOT BE ABLE TO MAINTAIN
OUR EXISTING GROWTH RATE.
Our revenue, earnings and other operating results have fluctuated
significantly in the past and may fluctuate significantly in the future.
Although we have had significant revenue and earnings growth in recent quarters,
we may not be able to sustain these growth rates. Our future operating results
will depend on many factors, including the following:
o our ability to design, manufacture and deliver our products in a timely
and cost-effective manner;
o our ability to design, manufacture and deliver our products in large
enough volumes to satisfy our customers' requirements;
o the ability of third party foundries and assemblers to manufacture and
assemble our products in a timely and cost-effective manner that meets
our customers' requirements;
o unexpected poor line, assembly or test yields for our products;
o our ability to expand our production of GaAs HBT wafers at our wafer
fabrication facility;
o our ability to complete the construction of our second wafer fabrication
facility and to bring it into operation;
o demand for our products;
o demand for our customers' products;
o competition; and
o general industry and global economic conditions.
On October 17, 2000, we announced that we experienced lower than expected
order activity during the second quarter of fiscal 2001, and that we anticipate
this will negatively impact revenues in the third fiscal quarter. We attribute
this decreased order activity to three factors: an overly optimistic forecast
for the growth of the handset market that has led to excess inventories among
manufacturers and reduced component demand; introduction delays by manufacturers
for some highly complex next-generation handsets; and a delay that we have
experienced in the introduction of a next-generation product that we now believe
we will begin shipping in high volume in the fourth quarter of fiscal 2001. As a
result of these factors, we expect revenues for the third fiscal quarter to be
down sequentially approximately 20%.
It is likely that our future operating results will in the future again be
adversely affected by the factors set forth above or other factors. If our
future operating results are below the expectations of stock market analysts or
our investors, our stock price and the trading price of the notes may decline.
WE FACE CHALLENGES MANAGING RAPID GROWTH.
We are experiencing a period of significant growth that will continue to
place a great strain on our management and other resources. We have grown from
133 employees on March 31, 1997 to 817 employees on March 31, 2000. To manage
our growth effectively, we must:
o implement and improve operational and financial systems;
o coordinate the construction, upfit and expansion of our physical
facilities in multiple locations;
o expand our presence in international locations;
o train and manage our employee base; and
o attract qualified people with experience in RF engineering, integrated
circuit design, wafer fabrication, wireless systems and technical
marketing and support.
Competition for these people is intense. We must also manage multiple
relationships with various customers, business partners and other third parties,
such as our foundry and assembly partners. Moreover, we will spend substantial
amounts in connection with our rapid growth and may have additional unexpected
costs. Our systems, networks, software tools, procedures or controls may not be
adequate to support our operations and we may not be able to expand quickly
enough to exploit potential market opportunities. Our future operating results
will also depend on expanding sales and marketing, research and development and
administrative support. If we cannot attract qualified people or manage growth
effectively, our operating results will be adversely affected.
WE FACE RISKS ASSOCIATED WITH OUR WAFER FABRICATION FACILITY CONSTRUCTION AND
OPERATION ACTIVITIES.
Developing, expanding and exploiting our own GaAs HBT manufacturing capacity
has been and continues to be a key element of our overall business strategy. In
June 1998, we completed the first phase of a 64,000 square foot GaAs HBT wafer
fabrication facility located in Greensboro, North Carolina, and we are currently
working on an expansion of the facility's capacity. In addition, in September
1999, we began construction on a second wafer fabrication facility at a nearby
site.
We began commercial shipments of products from our first facility in
September 1998. Production from the facility has gradually increased since then,
and we expect it to continue to increase into fiscal 2001. As we increase
production at this facility, we must qualify each new RFIC design with our
customers. As parts are brought into production, we must maintain our cycle
times and our line yields, assembly yields and test yields in order to reach our
manufacturing goals. A number of factors will affect the future success of this
facility, including the following:
o our ability to qualify new products in a timely manner;
o demand for our products;
o our manufacturing cycle times;
o our production yields;
o our ability to generate revenues in amounts that cover the significant
fixed costs of operating a wafer fabrication facility;
o our ability to hire, train and manage qualified production personnel;
o our compliance with applicable environmental and other laws and
regulations; and
o our inability to use all or any significant portion of our facility for
prolonged periods of time for any reason.
The capacity expansion that we are currently undertaking has involved moving
our MBE wafer starting equipment out of the facility to a new leased location,
reconfiguring the space formerly occupied by this equipment with additional
wafer production equipment and hiring additional production personnel. We
currently expect the facility to be capable of its maximum output of
approximately 60,000 four-inch wafers per year by December 31, 2000. Capacity
expansion activities like this are subject to a number of risks, including the
following:
o unforeseen environmental or engineering problems;
o unavailability or late delivery of process equipment;
o work stoppages and delays; and
o delays in bringing production equipment on-line.
If we fail or are delayed in our efforts to expand this facility, it could have
a material adverse effect on our business, financial condition and results of
operations.
The full capacity output of the first phase of our second GaAs HBT wafer
fabrication facility is anticipated to be the equivalent of approximately 60,000
four-inch wafers. The wireless communications industry is currently experiencing
delays in the production of new handsets, which we believe are due primarily to
technical issues faced by handset manufacturers related to the complex nature of
new handsets. Although it is impossible currently to predict when these issues
will be resolved, we plan to increase production of components for these
handsets as the handsets near production and are introduced. Our expanding
production capacity in our first fabrication facility is currently expected to
be sufficient to address initial demand for these next generation products
through at least the fourth quarter of fiscal 2001. Accordingly, we now plan to
delay the ramp-up of production from our second fabrication facility until
demand for these products increases. The first phase of construction of this
facility is on schedule for completion by December 31, 2000, and we believe the
production capacity of this facility will position us to react quickly once the
next-generation handsets are introduced to the marketplace. We currently plan to
delay a proposed second phase of construction for this facility, which would
increase the facility's total output to the equivalent of 210,000 four-inch
wafers per year, until market conditions strengthen. The projected cost for this
facility is approximately $140 million for the first phase and $180 million for
the second phase.
The construction of this facility is subject to various risks and conditions
beyond our control, including:
o inclement weather conditions;
o unforeseen hazards or conditions that hinder, delay or increase the cost
of development;
o unavailability of building materials;
o delays in receiving necessary governmental permits;
o unavailability of manufacturing equipment; and
o construction delays.
We therefore cannot be sure that we will be able to complete this
construction in a timely manner. A significant delay could have a material
adverse effect on our business, financial condition and results of operations.
Bringing this new fabrication facility on-line will be labor intensive,
technically challenging, time consuming and logistically complex. It will
require us to make significant investments of labor and capital. The major steps
include:
o facility design;
o equipment and material specifications and sourcing;
o clean room certification;
o equipment installation; and
o the hiring and training of skilled production personnel.
Once the clean room is operational, we must transfer our manufacturing
process and run test wafers until the manufacturing process is adjusted to the
point where commercial production is feasible. Before production can commence,
wafers must be qualified by individual customers on a component-by-component
basis, even for products previously qualified at our first facility. While many
of these steps must occur concurrently, other steps must occur after the
achievement of certain milestones. Thus, the delay in one or more steps could
materially delay the entire process.
As a result, we cannot be sure that we will be able to implement
successfully and in a timely manner our GaAs HBT processes at this facility or
that we will be able successfully to produce GaAs HBT wafers at acceptable
manufacturing yields or in a manner that allows us to offer GaAs HBT products
from this facility at competitive prices. A failure or delay in our efforts to
fabricate GaAs HBT wafers at acceptable manufacturing cycle times, yields, costs
and quality and in volumes sufficient to satisfy customer demands could have a
material adverse effect on our business, financial condition and results of
operations.
WE DEPEND ON A FEW LARGE CUSTOMERS.
Historically, a substantial portion of our revenue has come from large
purchases by a small number of customers. We expect that trend to continue. For
example, in the first half of fiscal 2001, our top five customers accounted for
69% of our total revenue; in fiscal 2000, our top five customers accounted for
79% of total revenue; in fiscal 1999, our top five customers accounted for 87%
of our total revenue; and in fiscal 1998, our top five customers accounted for
70% of our total revenue. Accordingly, our future operating results depend on
the success of our largest customers and on our success in selling large
quantities of our products to them.
The identity and the predominance of our largest customers have varied
significantly from year to year. Sales to Nokia accounted for 53% of our revenue
during the first half of fiscal 2001, 59% in fiscal 2000 and 73% in fiscal 1999.
In fiscal 1998, sales to Nokia accounted for 44% and sales to LGIC accounted for
13% of our revenue. In fiscal 1997, sales to QUALCOMM Incorporated accounted for
32% and sales to Samsung accounted for 23% of our revenue.
We typically manufacture custom products on an exclusive basis for one
customer for a negotiated period of time. This factor, along with capacity
constraints, makes it difficult for us to diversify our customer base. The
concentration of our revenues with a few large customers makes us particularly
dependent on factors affecting those customers. For example, if demand for their
products decreases, they may stop purchasing our products and our operating
results would suffer. We experienced such a decrease in demand during the second
quarter of fiscal 2001, and we believe it will negatively affect our operating
results for the third quarter. Most of our customers can cease incorporating our
products into their products with little notice to us and with little or no
penalty. The loss of a large customer and failure to add new customers to
replace lost revenue would have a material adverse effect on our business,
financial condition and results of operations.
IF WE EXPERIENCE POOR PRODUCTION YIELDS, OUR OPERATING RESULTS MAY SUFFER.
Our integrated circuit products, especially our GaAs HBT products, are very
complex. Each product has a unique design and each product is fabricated using
semiconductor process technologies that are highly complex. In many cases, the
products are assembled in customized packages. Our customers incorporate our
RFICs into high volume products such as cellular and PCS handsets and they
insist that our products meet their exact specifications for quality,
performance and reliability.
Our products are manufactured on round GaAs or silicon substrates, or
starting material, called wafers. Before our customers can use our products, the
wafers must be processed and cut or sawed into individual die. The die must then
be assembled, or packaged, and then the final product must be tested. Our
manufacturing yield is a combination of:
o line yield, which is the number of usable wafers that result from our
fabrication process;
o assembly yield, which is the number of assembled parts we actually
receive from the packaging house divided by the number of die available
on the wafer; and
o test yield, which is the number of assembled parts that pass all
component level testing divided by the total number of parts tested.
Our customers also test our RFICs once they have been assembled into their
products. The number of usable RFICs that result from our production process can
fluctuate as a result of many factors, including the following:
o design errors;
o defects in photomasks used to print circuits on a wafer;
o minute impurities in materials used;
o contamination of the manufacturing environment;
o equipment failure or variations in the fabrication process;
o losses from broken wafers or other human error; and
o defects in packaging.
Because average selling prices for our products tend to decline over time
and because many of our manufacturing costs are fixed, we are constantly trying
to improve our manufacturing yields. For a given level of sales, when our yields
improve, our gross margins improve; and when our yields decrease, our unit costs
are higher, our margins are lower, and our operating results are adversely
affected. In the past, we have experienced difficulties in achieving acceptable
yields on certain new products, and this has adversely affected our gross
margins and our operating results. For example, during the fourth quarter of
fiscal 1998, we took an unexpected charge of about $4.6 million to cover
defective products that had packaging-related problems. We may experience
similar problems in the future and we cannot predict when they may occur or
their severity. These problems could significantly affect our future operating
results.
OUR OPERATING RESULTS ARE SUBSTANTIALLY DEPENDENT ON DEMAND FOR OUR GAAS HBT
PRODUCTS.
Although we design products using multiple distinct process technologies, a
substantial portion of our revenue comes from the sale of GaAs HBT products. For
example, 93% of our revenue came from GaAs HBT products during the first half of
fiscal 2001, and 89% of our revenue came from the sale of GaAs HBT products
during fiscal 2000. We currently expect that this process concentration will
continue. Our dependence on GaAs HBT products could ultimately hurt our
operating results in the future. Competitors have begun to enter the market and
offer their own GaAs HBT products, and direct competition with competitors with
GaAs HBT process technology could adversely affect our selling prices. Also, new
process technologies are constantly being developed and one or more of these
processes could have characteristics that are superior to GaAs HBT. If we are
unable to access these technologies through licenses or foundry service
arrangements, we will be competitively disadvantaged. These and other factors
could reduce the demand for GaAs HBT components or otherwise adversely affect
our operating results.
OUR OPERATING RESULTS ARE SUBSTANTIALLY DEPENDENT ON DEVELOPMENT OF NEW
PRODUCTS.
Our future success will depend on our ability to develop new RFIC solutions
for existing and new markets. We must introduce new products in a timely and
cost-effective manner and we must secure production orders from our customers.
The development of new RFICs is a highly complex process, and we have
experienced delays in completing the development and introduction of new
products at times in the past. Our successful product development depends on a
number of factors, including the following:
o the accuracy of our prediction of market requirements and evolving
standards;
o acceptance of our new product designs;
o the availability of qualified RFIC designers;
o our timely completion of product designs; and
o acceptance of our customers' products by the market.
We may not be able to design and introduce new products in a timely or
cost-efficient manner and our new products may fail to meet the requirements of
the market or our customers. In that case, we likely will not reach the expected
level of production orders, which could adversely affect our operating results.
Even when a design win is achieved, our success is not assured. Design wins
require significant expenditures by us and typically precede volume revenues by
six to nine months or more. The actual value of a design win to us will
ultimately depend on the commercial success of our customers' products.
OUR EFFORTS TO DEVELOP MODULE PRODUCTS PRESENT SIGNIFICANT CHALLENGES.
In response to demands from OEMs, we are currently developing products that
combine one or more integrated circuits with one or more passive components,
such as capacitors, inductors and resistors, into a stand-alone module package.
In addition to using an independent packaging vendor for these products, we are
assembling and packaging some of these products in-house. We have not previously
packaged any type of RFIC on a commercial basis, and this vertical expansion of
our business requires significant investment in equipment and additional
personnel. It also requires us to develop expertise in new production processes
that are significantly different from RFIC fabrication processes.
The manufacture of modules requires us to obtain passive components from
third party suppliers, some of which may be difficult to obtain at times. To
avoid shortages, we may be required to maintain significant inventories of these
components and may be unable to pass these inventory costs on to our customers
if they cancel orders for module products. Also, given the complexity of these
products, developing a thorough method of testing modules once they have been
assembled presents significant technical challenges.
We began shipping commercial quantities of module units that we have
packaged ourselves during the first calendar quarter of 2000. We cannot be sure,
however, that we will successfully develop, implement and maintain this in-house
packaging capability or that we will otherwise be able to meet the needs of our
customers, including Nokia and QUALCOMM, for module products. This development
effort has presented and continues to present many technical and logistical
challenges, and if we are unsuccessful, our operating results could be adversely
affected.
OUR INDUSTRY'S TECHNOLOGY CHANGES RAPIDLY AND WE DEPEND ON DEVELOPMENT AND
GROWTH OF WIRELESS MARKETS.
We depend on the development and growth of markets for wireless
communications products and services, including cellular and PCS telephony,
wireless LANs, wireless security systems and other wireless applications. We
cannot be sure about the rate at which markets for these products will develop
or our ability to produce competitive products for these markets as they
develop.
We supply RFICs almost exclusively for wireless applications. The wireless
markets are characterized by frequent introduction of new products and services
in response to evolving product and process technologies and consumer demand for
greater functionality, lower costs, smaller products and better performance. As
a result, we have experienced and will continue to experience some product
design obsolescence. We expect our customers' demands for improvements in
product performance will increase, which means that we must continue to improve
our product designs and develop new products using new wafer fabrication
technologies. It is likely that a competing process technology will emerge that
permits the fabrication of integrated circuits that are superior to the RFICs we
make under existing processes. If that happens and we cannot design products
using that technology or develop competitive products, our operating results
will be adversely affected.
WE DEPEND HEAVILY ON OUR RELATIONSHIP WITH NOKIA.
We have agreed in principle with Nokia to develop and supply Nokia with
RFICs manufactured using our GaAs HBT processes. The arrangement contemplates
that we will negotiate separate agreements with Nokia for each component. Also,
we have agreed to give Nokia access to some of our RFIC technologies and to our
GaAs HBT wafer fabrication facility, and Nokia has agreed to give us rights to
bid for and supply Nokia's needs for certain RFICs. Under the separate
agreements resulting from our arrangement with Nokia, we have developed a number
of RFICs and supplied them to Nokia in commercial quantities. During the first
six months of fiscal 2001, sales to Nokia were about $106 million, or 53% of our
revenue. In fiscal 2000, sales to Nokia were about $169 million, or 59% of our
revenue. In fiscal 1999, sales to Nokia were about $112 million, or 73% of our
revenue. In fiscal 1998, Nokia sales were about $20 million, or 44% of our
revenue.
Our arrangement with Nokia can be ended without penalty by any of the
parties for any reason. The arrangement does not obligate Nokia to purchase any
additional products from us, and we cannot be sure that Nokia will remain a
significant customer or that our relationship will continue. The loss of Nokia
as a customer for any reason would have a material adverse effect on our
operating results.
WE DEPEND ON TRW FOR GAAS HBT TECHNOLOGY.
During fiscal 2000, $257.8 million of our revenue came from the sale of GaAs
HBT products, of which $180.5 million was attributable to products produced at
our facility.
We depend on our exclusive license from TRW for its GaAs HBT technology. If
the license is terminated or if it were determined that this technology
infringed on a third party's intellectual property rights, our operating results
would be adversely affected. TRW made no representation to us about whether the
licensed technology infringed on the intellectual property rights of anyone
else. TRW has agreed to supply to us, and we have agreed to buy from TRW,
certain minimum quantities of GaAs HBT wafers. These obligations continue until
December 31, 2000.
WE DEPEND HEAVILY ON THIRD PARTIES.
We use one independent foundry to manufacture our silicon-based products and
one independent foundry to manufacture our GaAs MESFET products. The foundry
that supplies our GaAs MESFET products is owned and operated by one of our
competitors. Access to other foundries for GaAs products could be particularly
difficult to obtain. We will remain dependent on a small number of independent
foundries to manufacture our products on a timely basis, to achieve acceptable
manufacturing yields and to offer us competitive pricing. The inability of these
independent foundries to deliver our products on a timely basis, allocate us
sufficient manufacturing capacity, achieve acceptable yields or offer us
competitive pricing would have a material adverse effect on our operating
results. We cannot be sure that we would be able to locate other foundries to
make our products if we lost any of these sources of supply.
We use independent vendors to package most of our integrated circuits. We
have had packaging quality problems with some of these vendors, especially with
GaAs HBT products. We took a non-recurring charge in the last quarter of fiscal
1998 of about $4.6 million to cover product returns and the establishment of
inventory reserves for products with packaging-related problems. During fiscal
1998, we also discovered quality problems with parts packaged by a second vendor
and stopped using that vendor. It is likely that we will have more packaging
problems in the future. A delay or reduction in product shipments or unexpected
product returns because of these problems could have an adverse effect on our
operating results.
WE OPERATE IN A VERY COMPETITIVE INDUSTRY.
Competition in the markets for our products is intense. We compete with
several companies primarily engaged in the business of designing, manufacturing
and selling RFICs, as well as suppliers of discrete products such as
transistors, capacitors and resistors. At least one of our competitors has GaAs
HBT technology and other companies are developing GaAs HBT and new fabrication
processes. In addition, many of our existing and potential customers manufacture
or assemble wireless communications devices and have substantial in-house
technological capabilities. Any of them could develop products that compete with
or replace ours. A decision by any of our large customers to design and
manufacture integrated circuits internally could have an adverse effect on our
operating results. We expect competition to increase. This could mean lower
prices for our products, reduced demand for our products and a corresponding
reduction in our ability to recover development, engineering and manufacturing
costs. Any of these developments would have an adverse effect on our operating
results.
Many of our existing and potential competitors have entrenched market
positions, considerable internal manufacturing capacity, established
intellectual property rights and substantial technological capabilities. Many of
our existing and potential competitors, including Conexant Systems, Inc.,
Fujitsu Limited, Hitachi Ltd., Matsushita Communication Industrial Co., and
Philips N.V., have greater financial, technical, manufacturing and marketing
resources than we do. We cannot be sure that we will be able to compete
successfully with our competitors.
WE DEPEND HEAVILY ON KEY PERSONNEL.
Our success depends in part on keeping key technical, marketing, sales and
management personnel. We do not have employment agreements with any of our
employees. We must also continue to attract qualified personnel. The competition
for qualified personnel is intense, and the number of people with experience,
particularly in RF engineering, integrated circuit design, wafer fabrication,
wireless systems and technical marketing and support, is limited. We cannot be
sure that we will be able to attract and retain other skilled personnel in the
future.
WE ARE SUBJECT TO RISKS FROM INTERNATIONAL SALES AND OPERATIONS.
Sales to customers in South Korea accounted for about 8% of our revenue
during the first half of fiscal 2001, about 18.1% of our revenue during fiscal
2000, about 13.3% of our revenue in fiscal 1999 and about 21.3% of our revenue
in fiscal 1998. Although South Korean sales grew significantly during fiscal
2000, they decreased from prior periods during each of the last two quarters of
the fiscal year. We believe this market remains unstable and we cannot predict
how it will perform in the future.
Sales to customers located outside the United States accounted for about 62%
of our revenue in the first half of fiscal 2001, about 56% of our revenue in
fiscal 2000, about 59% of our revenue in fiscal 1999 and about 50% of our
revenue in fiscal 1998. We expect that revenue from international sales will
continue to be a significant part of our total revenue. International sales are
subject to a variety of risks, including risks arising from currency
fluctuations and restrictions, tariffs, trade barriers, taxes and export license
requirements. Because all of our foreign sales are denominated in U.S. dollars,
our products become less price competitive in countries with currencies that are
low or are declining in value against the U.S. dollar. Also, we cannot be sure
that our international customers will continue to accept orders denominated in
U.S. dollars. If they do not, our reported revenue and earnings will become more
directly subject to foreign exchange fluctuations.
All but one of our circuit assembly vendors are located in Asia. This
subjects us to regulatory, geopolitical and other risks of conducting business
outside the United States. We do business with our foreign assemblers in U.S.
dollars. Our assembly costs increase in countries with currencies that are
increasing in value against the U.S. dollar. Also, we cannot be sure that our
international assemblers will continue to accept orders denominated in U.S.
dollars. If they do not, our costs will become more directly subject to foreign
exchange fluctuations.
WE RELY ON INTELLECTUAL PROPERTY AND COULD FACE CLAIMS OF INFRINGEMENT.
Our success depends in part on our ability to obtain patents, trademarks and
copyrights, maintain trade secret protection and operate our business without
infringing on the proprietary rights of other parties. Although we do not
believe this to be the case, it could be determined in the future that TRW or we
are infringing someone's intellectual property rights. We cannot be sure that we
could obtain licenses on commercially reasonable terms or that litigation would
not occur if there were any infringement. If we were unable to obtain necessary
licenses or if litigation arose out of infringement claims, our operating
results could be adversely affected.
In addition to patent and copyright protection, we also rely on trade
secrets, technical know-how and other unpatented proprietary information
relating to our product development and manufacturing activities. We try to
protect this information with confidentiality agreements with our employees and
other parties. We cannot be sure that these agreements will not be breached,
that we would have adequate remedies for any breach or that our trade secrets
and proprietary know-how will not otherwise become known or independently
discovered by others.
During fiscal 2000, three of our new employees were named defendants in
trade secret litigation in connection with our hiring of them. The former
employers of these individuals asserted that, among other things, our hiring
would lead to disclosure of those parties' trade secrets. Some of these claims
have been dismissed, but others remain pending. We believe these claims are
without merit, and that this litigation will ultimately be resolved in a
satisfactory manner; however, we or our employees could be subject to similar
claims and litigation in the future.
WE ARE SUBJECT TO STRINGENT ENVIRONMENTAL REGULATION.
We are subject to a variety of federal, state and local requirements
governing the protection of the environment. These environmental regulations
include those related to the use, storage, handling, discharge and disposal of
toxic or otherwise hazardous materials used in our manufacturing processes.
Because the public is focusing more attention on the environmental impact of the
operations of the semiconductor industry, these requirements may become more
stringent in the future. Failure to comply with environmental laws could subject
us to substantial liability or force us to significantly change our
manufacturing operations. In addition, under some of these laws and regulations,
we could be held financially responsible for remedial measures if our properties
are contaminated, even if we did not cause the contamination.
TRW AND OUR MANAGEMENT ARE SIGNIFICANT SHAREHOLDERS.
Our directors and executive officers and their affiliates (including TRW)
beneficially own about 18% of RFMD's common stock. TRW, our largest shareholder,
beneficially owns about 15% of the common stock and has agreed to maintain
ownership of at least 15,882,322 shares of common stock through May 1, 2001.
These shareholders thus can exercise significant influence over all matters
requiring shareholder approval, including the election of directors and approval
of significant corporate transactions. TRW has agreed to refrain until June 6,
2002 from taking certain actions affecting control over us. If a third party
offers to acquire all of our stock, however, TRW will have 30 days to make a
counterproposal on the same or better terms and could require us to submit the
proposal to a vote by our shareholders. This right could discourage a third
party from offering to acquire all of our outstanding shares.
OUR STOCK PRICE IS SUBJECT TO VOLATILITY.
The trading price of our common stock and, in turn, the notes could be
subject to wide fluctuations in response to quarterly variations in operating
results, adverse business developments, changes in financial estimates by
securities analysts, announcements of technological innovations, new products by
us or our competitors, transactions by corporate insiders and other events and
factors. Since completion of our public offering in June 1997, our stock price
has fluctuated widely. Also, the stock market has experienced extreme price and
volume fluctuations based on factors outside our control that have particularly
affected the market prices for many high technology companies. These broad
market fluctuations may materially and adversely affect the market price of the
notes and the common stock into which the notes are convertible.
FUTURE SALES OF SHARES COULD HAVE AN ADVERSE EFFECT ON MARKET PRICE.
Sales of substantial amounts of common stock in the public market or the
prospect of such sales could adversely affect the market price for our common
stock and, in turn, the notes and our ability to raise equity capital in the
future. As of October 31, 2000, we had outstanding a total of 162,225,454 shares
of common stock. Of these shares, approximately 140,140,775 shares are freely
tradable without restriction or further registration under the Securities Act,
except for any shares acquired by our "affiliates," as that term is defined in
Rule 144 under the Securities Act. We believe that the holders of the remaining
22,084,679 shares are affiliates and, accordingly, that their shares may be sold
without registration only in compliance with the Securities Act (including Rule
144). As of September 30, 2000, options to purchase 16,395,337 shares of common
stock were outstanding under our employee stock option plans, with a weighted
average exercise price of $12.54 per share and a weighted average remaining
contractual life of eight years. Of these, options to purchase 2,836,395 shares
were exercisable at September 30, 2000, at a weighted average exercise price of
$2.94 per share.
WE MAY ENGAGE IN FUTURE ACQUISITIONS THAT DILUTE OUR SHAREHOLDERS, CAUSE US TO
INCUR DEBT AND ASSUME CONTINGENT LIABILITIES.
As part of our business strategy, we expect to continue to review potential
acquisitions that could complement our current product offerings, augment our
market coverage or enhance our technical capabilities, or that may otherwise
offer growth opportunities. While we currently have no definitive agreements
providing for any such acquisitions, we may acquire businesses, products or
technologies in the future. In the event of such future acquisitions, we could
issue dilutive securities, incur substantial debt, or assume contingent
liabilities. Such actions by us could seriously harm our results of operations
or the price of our common stock. Acquisitions also entail numerous other risks
that could adversely affect our business, results of operations and financial
condition, including:
o difficulties in assimilating acquired operations, technologies or
products;
o unanticipated costs or capital expenditures associated with the
acquisition;
o acquisition-related charges and amortization of acquired technology and
other intangibles that could negatively affect our reported results of
operation;
o diversion of management's attention from our business;
o injury to existing business relationships with suppliers and customers;
and
o failure to successfully integrate these businesses, products,
technologies and personnel.
THE NOTES ARE SUBORDINATED.
The notes will be unsecured and subordinated in right of payment to all of
our existing and future senior indebtedness. In the event of our bankruptcy,
liquidation or reorganization or upon acceleration of the notes due to an event
of default under the indenture and in certain other events, our assets will be
available to pay obligations on the notes only after all senior indebtedness has
been paid. As a result, there may not be sufficient assets remaining to pay
amounts due on any or all of the outstanding notes. The notes also will be
effectively subordinated to the liabilities, including trade payables, of our
subsidiaries. We are not prohibited from incurring debt, including senior
indebtedness, under the indenture. If we or our subsidiaries were to incur
additional debt or liabilities, our ability to pay our obligations on the notes
could be adversely affected. As of September 30, 2000 we had secured obligations
under our existing lease facility of up to approximately $80.2 million that
would constitute senior indebtedness for purposes of the indenture. Our
subsidiaries did not have any outstanding indebtedness or other liabilities.
WE MAY BE UNABLE TO MEET THE REQUIREMENTS UPON A CHANGE IN CONTROL.
Upon a change in control, you may require us to purchase all or a portion of
your notes. If a change in control were to occur, we may not have enough funds
to pay the purchase price for all tendered notes. Our existing lease financing
arrangement that we expect to use for the construction of the first phase of our
new wafer fabrication facility currently prohibits the repurchase of the notes
upon a change in control and also provides that a change in control constitutes
an event of default under the applicable agreement. Future credit agreements or
other agreements relating to our indebtedness might contain similar provisions.
If a change in control occurs at a time when we are prohibited from purchasing
the notes, we could seek the consent of our lenders to purchase the notes or
could attempt to refinance this debt. If we do not obtain a consent, we could
not purchase the notes. Our failure to purchase tendered notes would constitute
an event of default under the indenture, which might constitute a default under
the terms of our other debt. In such circumstances, or if a change in control
would constitute an event of default under our senior indebtedness, the
subordination provisions of the indenture would restrict payments to you. The
term "change in control" is limited to certain specified transactions and may
not include other events that might harm our financial condition. Our obligation
to offer to purchase the notes upon a change in control would not necessarily
afford you protection in the event of a highly leveraged transaction,
reorganization, merger or similar transaction involving us.
A PUBLIC MARKET FOR THE NOTES MAY NOT BE MAINTAINED.
Since the issuance of the notes, the initial purchasers have made a market
in the notes. However, the initial purchasers are not obligated to make a market
and may discontinue this market making activity at any time without notice. In
addition, market-making activity by the initial purchasers will be subject to
the limits imposed by the Securities Act and the Exchange Act. As a result, we
cannot assure you that any market for the notes will be maintained. If an active
market for the notes fails to develop or be sustained, the trading price of the
notes could decline significantly.
ADVERSE RATING OF THE NOTES MAY CAUSE THEIR TRADING PRICE TO FALL.
We believe it is likely that one or more rating agencies may rate the notes.
If one or more rating agencies assign the notes a rating lower than expected by
investors, or reduce their ratings in the future, the market price of the notes
and our common stock would be harmed.
USE OF PROCEEDS
We will not receive any proceeds from the sale by any selling securityholder
of the notes or the underlying common stock.
RATIO OF EARNINGS TO FIXED CHARGES
The ratio of earnings to fixed charges for each of the periods indicated is
as follows:
<TABLE>
<CAPTION>
Year Ended March 31,
<S> <C> <C> <C> <C>
--------------------- Six Months Ended
1998 1999 20000 September 30, 2000
------ ------ ------ -------------------
Ratio of Earnings to Fixed Charges(1) NM(2) 7.4x 20.5x 14.3x
</TABLE>
----------
[FN]
(1) These ratios are calculated by dividing (a) earnings before income taxes
adjusted for fixed charges by (b) fixed charges. Fixed charges include
interest expense plus capitalized interest and the portion of interest
expense under operating leases we deem to be representative of the interest
factor.
(2) In fiscal 1998, earnings before income taxes were insufficient to cover
fixed charges by $523,000.
</FN>
DESCRIPTION OF THE NOTES
We issued the notes under an indenture to be dated as of August 1, 2000
between us and First Union National Bank, as trustee. The following summarizes
some, but not all, provisions of the notes and the indenture. We urge you to
read the indenture because it, and not this description, defines your rights as
a holder of the notes. A copy of the form of indenture and the form of
certificate evidencing the notes is available to you upon request.
In this section of the offering circular entitled "Description of the
Notes," when we refer to "RFMD," "we," "our," or "us," we are referring to RF
Micro Devices, Inc. and not any of its subsidiaries.
GENERAL
The notes are unsecured general obligations of RFMD in an aggregate
principal amount of $300,000,000 and are subordinate in right of payment as
described under "Subordination of Notes." The notes are convertible into common
stock as described under "Conversion of Notes." The notes have been issued only
in denominations of $1,000 or in multiples of $1,000. The notes will mature on
August 15, 2005, unless earlier redeemed at our option by us or purchased by us
at your option upon a change in control.
We are not restricted from paying dividends, incurring debt, or issuing or
repurchasing our securities under the indenture. In addition, there are no
financial covenants in the indenture. You are not protected under the indenture
in the event of a highly leveraged transaction or a change in control of RFMD,
except to the extent described under "Purchase of Notes at Your Option Upon a
Change in Control."
The notes bear interest at the annual rate of 3.75%, subject to increases
described in "Registration Rights" below. Interest is payable on February 15 and
August 15 of each year, beginning February 15, 2001, subject to limited
exceptions if the notes are converted, redeemed or purchased prior to the
interest payment date. The record dates for the payment of interest will be
February 1 and August 1. We may, at our option, pay interest on the notes by
check mailed to the holders. However, a holder with an aggregate principal
amount in excess of $2,000,000 will be paid by wire transfer in immediately
available funds at its election. Interest will be computed on the basis of a
360-day year comprised of twelve 30-day months.
We maintain, through the trustee, an office in The City of New York where
the notes may be presented for registration, transfer, exchange or conversion.
CONVERSION OF NOTES
You have the right, at your option, to convert your notes into shares of
common stock at any time prior to maturity, unless previously redeemed or
purchased, at the conversion price of $45.085 per share, subject to the
adjustments described below.
Except as described below, we will not make any payment or other adjustment
for accrued interest or dividends on any common stock issued upon conversion of
the notes. If you submit your notes for conversion between a record date and the
opening of business on the next interest payment date (except for notes or
portions of notes called for redemption or subject to purchase following a
change in control on a redemption date or a purchase date, as the case may be,
occurring during the period from the close of business on a record date and
ending on the opening of business on the first business day after the next
interest payment date, or if this interest payment date is not a business day,
the second business day after the interest payment date), you must pay funds
equal to the interest payable on the converted principal amount. We will not
issue fractional shares of common stock upon conversion of notes. Instead, we
will pay a cash amount based upon the closing market price of the common stock
on the last trading day prior to the date of conversion. If the notes are called
for redemption or are subject to purchase following a change in control, your
conversion rights on the notes called for redemption or so subject to purchase
will expire at the close of business on the last business day before the
redemption date or purchase date, as the case may be, unless we default in the
payment of the redemption price or purchase price. If you have submitted your
notes for purchase upon a change in control, you may only convert your notes if
you withdraw your election in accordance with the indenture.
The conversion price will be adjusted upon the occurrence of:
(1) the issuance of shares of our common stock as a dividend or distribution
on our common stock;
(2) the subdivision or combination of our outstanding common stock;
(3) the issuance to all or substantially all holders of our common stock of
rights or warrants entitling them for a period of not more than 60 days
to subscribe for or purchase our common stock, or securities convertible
into our common stock, at a price per share or a conversion price per
share less than the then current market price per share, provided that
the conversion price will be readjusted to the extent that such rights
or warrants are not exercised prior to the expiration;
(4) the distribution to all or substantially all holders of our common stock
of shares of our capital stock, evidences of indebtedness or other
non-cash assets, or rights or warrants, excluding:
o dividends, distributions and rights or warrants referred to in clause
(1) or (3) above;
o dividends or distributions exclusively in cash referred to in clause
(5) below; and
o distribution of rights to all holders of common stock pursuant to an
adoption of a shareholder rights plan;
(5) the dividend or distribution to all or substantially all holders of our
common stock of all-cash distributions in an aggregate amount that
together with (A) any cash and the fair market value of any other
consideration payable in respect of any tender offer by us or any of our
subsidiaries for our common stock consummated within the preceding 12
months not triggering a conversion price adjustment and (B) all other
all-cash distributions to all or substantially all holders of our common
stock made within the preceding 12 months not triggering a conversion
price adjustment exceeds an amount equal to 10% of our market
capitalization on the business day immediately preceding the day on
which we declare such distribution; and
(6) the purchase of our common stock pursuant to a tender offer made by us
or any of our subsidiaries to the extent that the same involves
aggregate consideration that together with (A) any cash and the fair
market value of any other consideration payable in respect of any tender
offer by us or any of our subsidiaries for our common stock consummated
within the preceding 12 months not triggering a conversion price
adjustment and (B) all-cash distributions to all or substantially all
holders of our common stock made within the preceding 12 months not
triggering a conversion price adjustment, exceeds an amount equal to 10%
of our market capitalization on the expiration date of such tender
offer.
The initial conversion price of the notes was adjusted to $45.085 per share
from $90.17 per share, effective at the opening of business on August 28, 2000,
to reflect a 2-for-1 common stock split announced on July 25, 2000.
In the event of:
o any reclassification of our common stock, or
o a consolidation, merger or combination involving RFMD, or
o a sale or conveyance to another person of the property and assets of RFMD
as an entirety or substantially as an entirety,
in which holders of our outstanding common stock would be entitled to receive
stock, other securities, other property, assets or cash for their common stock,
holders of notes generally are entitled to convert their notes into the same
type of consideration received by common stock holders immediately prior to one
of these types of events.
You may, in some circumstances, be deemed to have received a distribution or
dividend subject to United States federal income tax as a result of an
adjustment or the nonoccurrence of an adjustment to the conversion price.
We are permitted to reduce the conversion price of the notes by any amount
for a period of at least 20 days if our board of directors determines that such
reduction would be in the best interest of RFMD. We are required to give at
least 15 days prior notice of any reduction in the conversion price. We may also
reduce the conversion price to avoid or diminish income tax to holders of our
common stock in connection with a dividend or distribution of stock or similar
event.
No adjustment in the conversion price will be required unless it would
result in a change in the conversion price of at least one percent. Any
adjustment not made will be taken into account in subsequent adjustments. Except
as stated above, we will not adjust the conversion price for the issuance of our
common stock or any securities convertible into or exchangeable for our common
stock or the right to purchase our common stock or such convertible or
exchangeable securities.
SUBORDINATION OF NOTES
The indebtedness evidenced by the notes is subordinated to the extent
provided in the indenture to the prior payment in full, in cash or other payment
satisfactory to holders of senior indebtedness, of all senior indebtedness.
Upon any distribution of our assets upon any dissolution, winding-up,
liquidation or reorganization, or in bankruptcy, insolvency, receivership or
similar proceedings, payment of the principal of, premium, if any, and interest
on the notes is to be subordinated in right of payment to the prior payment in
full, in cash or other payment satisfactory to holders of senior indebtedness,
of all senior indebtedness.
In the event of any acceleration of the notes because of an event of
default, the holders of any senior indebtedness then outstanding would be
entitled to payment in full, in cash or other payment satisfactory to holders of
senior indebtedness, of all obligations in respect to such senior indebtedness
before the holders of notes are entitled to receive any payment or other
distribution. We are required to promptly notify holders of senior indebtedness
if payment of the notes is accelerated because of an event of default.
We also may not make any payment on the notes if:
o a default in the payment of designated senior indebtedness occurs and is
continuing beyond any applicable period of grace, or
o any other default occurs and is continuing with respect to designated
senior indebtedness that permits holders of the designated senior
indebtedness to accelerate its maturity and the trustee receives a
notice of such default, which we refer to as a payment blockage notice,
from any person permitted to give this notice under the indenture.
We may resume making payments on the notes:
o in the case of a payment default, when the default is cured or waived or
ceases to exist, and
o in the case of a nonpayment default, the earlier of when the default is
cured or waived or ceases to exist or 179 days after receipt of the
payment blockage notice.
No new period of payment blockage may be commenced pursuant to a payment
blockage notice unless and until 365 days have elapsed since our receipt of the
prior payment blockage notice.
No default that existed on the date of delivery of any payment blockage
notice to the trustee shall be the basis for a subsequent payment blockage
notice.
By reason of the subordination provisions described above, in the event of
our bankruptcy, dissolution or reorganization, holders of senior indebtedness
may receive more, ratably, and holders of the notes may receive less, ratably,
than the other creditors of RFMD. These subordination provisions will not
prevent the occurrence of any event of default under the indenture. We are not
limited in or prohibited from incurring additional senior indebtedness under the
indenture.
A portion of our operations is conducted through subsidiaries. As a result,
our cash flow and our ability to service our debt, including the notes, would
depend upon the earnings of our subsidiaries. In addition, we would be dependent
on the distribution of earnings, loans or other payments by our subsidiaries to
us.
Our subsidiaries are separate and distinct legal entities. Our subsidiaries
have no obligation to pay any amounts due on the notes or to provide us with
funds for our payment obligations, whether by dividends, distributions, loans or
other payments. In addition, any payment of dividends, distributions, loans or
advances by our subsidiaries to us could be subject to statutory or contractual
restrictions. Payments to us by our subsidiaries will also be contingent upon
our subsidiaries' earnings.
Our right to receive any assets of any of our subsidiaries upon their
liquidation or reorganization, and therefore the right of the holders of the
notes to participate in those assets, will be effectively subordinated to the
claims of that subsidiary's creditors, including trade creditors. In addition,
even if we were a creditor of any of our subsidiaries, our rights as a creditor
would be subordinate to any security interest in the assets of our subsidiaries
and any indebtedness of our subsidiaries senior to that held by us.
As of September 30, 2000 we had secured obligations under our existing lease
facility of up to approximately $80.2 million that would constitute senior
indebtedness for purposes of the indenture, while our subsidiaries had no
outstanding indebtedness or other liabilities.
DEFINITIONS OF SENIOR INDEBTEDNESS, INDEBTEDNESS AND DESIGNATED SENIOR
INDEBTEDNESS
"DESIGNATED SENIOR INDEBTEDNESS" means our obligations under our existing
lease financing arrangement that we expect to use for the construction of the
first phase of our new wafer fabrication facility, and any other senior
indebtedness designated by the agent for the lease financing arrangement. After
payment in full of the foregoing lease financing arrangement, "designated senior
indebtedness" means any particular senior indebtedness that expressly provides
that such senior indebtedness is "designated senior indebtedness" for purposes
of the indenture.
"INDEBTEDNESS" means:
(1) all of our indebtedness, obligations and other liabilities, contingent
or otherwise, for borrowed money, including:
o overdrafts, foreign exchange contracts, currency exchange agreements,
interest rate protection agreements, and any loans or advances from
banks, whether or not evidenced by notes or similar instruments, or
o evidenced by bonds, debentures, notes or similar instruments, whether
or not the recourse of the lender is to all of our assets or to only
a portion thereof, other than any account payable or other accrued
current liability or obligation incurred in the ordinary course of
business in connection with the obtaining of materials or services,
(2) all of our reimbursement obligations and other liabilities, contingent
or otherwise, with respect to letters of credit, bank guarantees or
bankers' acceptances,
(3) all of our obligations and liabilities, contingent or otherwise, in
respect of leases required, in conformity with generally accepted
accounting principles, to be accounted for as capitalized lease
obligations on our balance sheet, or under other leases for facilities
equipment or related assets, whether or not capitalized, entered into or
leased for financing purposes, as determined by RFMD,
(4) all of our obligations and other liabilities, contingent or otherwise,
under any lease or related document, including a purchase agreement, in
connection with the lease of real property or improvements (or any
personal property included as part of any such lease) which provides
that we are contractually obligated to purchase or cause a third party
to purchase the leased property and thereby guarantee a residual value
of leased property to the lessor and all of our obligations under such
lease or related document to purchase or to cause a third party to
purchase the leased property (whether or not such lease transaction is
characterized as an operating lease or a capitalized lease in accordance
with generally accepted accounting principles),
(5) all of our obligations, contingent or otherwise, with respect to an
interest rate, currency or other swap, cap, floor or collar agreement,
hedge agreement, forward contract, or other similar instrument or
agreement or foreign currency hedge, exchange, purchase or similar
instrument or agreement,
(6) all of our direct or indirect guaranties or similar agreements to
purchase or otherwise acquire or otherwise assure a creditor against
loss in respect of indebtedness, obligations or liabilities of another
person of the kind described in clauses (1) through (5),
(7) any indebtedness or other obligations described in clauses (1) through
(6) secured by any mortgage, pledge, lien or other encumbrance existing
on property which is owned or held by us, regardless of whether the
indebtedness or other obligation secured thereby has been assumed by us,
and
(8) any and all deferrals, renewals, extensions and refundings of, or
amendments, modifications supplements to, any indebtedness, obligation
or liability of the kind described in clauses (1) through (7).
"SENIOR INDEBTEDNESS" means the principal of, premium, if any, interest,
including all interest accruing subsequent to the commencement of any bankruptcy
or similar proceeding, whether or not a claim for post-petition interest is
allowable as a claim in any such proceeding, and rent payable on or in
connection with, and all fees, costs, expenses and other amounts accrued or due
on or in connection with, indebtedness of RFMD whether outstanding on the date
of the indenture or thereafter created, incurred, assumed, guaranteed or in
effect guaranteed by RFMD, including all deferrals, renewals extensions or
refundings of, or amendments, modifications or supplements to, the foregoing,
unless in the case of any particular indebtedness the instrument creating or
evidencing the same or the assumption or guarantee thereof expressly provides
that such indebtedness shall not be senior in right of payment to the notes or
expressly provides that such indebtedness is on the same basis or junior to the
notes.
Senior indebtedness does not include any indebtedness of RFMD to any
subsidiary of RFMD.
PROVISIONAL REDEMPTION
We may redeem any portion of the notes at any time prior to August 20, 2003
upon at least 20 and not more than 60 days' notice by mail to the holders of the
notes, at a redemption price equal to $1,000 per note plus accrued and unpaid
interest to the redemption date if (1) the closing price of our common stock has
exceeded 150% of the conversion price for at least 20 trading days in any
consecutive 30-day trading period ending on the trading day prior to the mailing
of the notice of redemption and (2) the shelf registration statement covering
resales of the notes and the common stock is effective and expected to remain
effective and available for use for the 30 days following the redemption date,
unless registration is no longer required.
If we redeem the notes under these circumstances, we will make an additional
"make whole" payment on the redeemed notes equal to $112.50 per $1,000 note,
minus the amount of any interest actually paid or accrued and unpaid on the note
prior to the redemption date. We must make these "make whole" payments on all
notes called for redemption, including notes converted after the date we mailed
the notice. The "make whole" payment for notes converted shall not be reduced by
accrued and unpaid interest. We may make these "make whole" payments, at our
option, either in cash or in our common stock or a combination of cash and
stock, if a shelf registration covering resales of such common stock is
effective and expected to remain effective and available for use for the 30 days
following the redemption date. We will specify the type of consideration for the
"make whole" payment in the redemption notice. Payments made in our common stock
will be valued at 97% of the average of the closing sales prices of our common
stock for the five trading days ending on the day prior to the redemption date.
OPTIONAL REDEMPTION BY RFMD
We may redeem the notes on or after August 20, 2003, on at least 20 days and
no more than 60 days notice, in whole or in part, at the following redemption
prices expressed as percentages of the principal amount:
<TABLE>
<CAPTION>
Redemption
Period Price
-------- -----------
<S> <C>
Beginning on August 20, 2003 and ending on August 14, 2004..... 100.9375%
Beginning on August 15, 2004 and thereafter................... 100.0000%
</TABLE>
In each case, we will pay accrued interest to, but excluding, the redemption
date. If the redemption date is an interest payment date, interest will be paid
to the record holder on the relevant record date.
If fewer than all of the notes are to be redeemed, the trustee will select
the notes to be redeemed by lot, or in its discretion, on a pro rata basis. If
any note is to be redeemed in part only, a new note in principal amount equal to
the unredeemed principal portion will be issued. If a portion of your notes is
selected for partial redemption and you convert a portion of your notes, the
converted portion will be deemed to be of the portion selected for redemption.
No sinking fund is provided for the notes.
PURCHASE OF NOTES AT YOUR OPTION UPON A CHANGE IN CONTROL
If a change in control occurs, you will have the right to require us to
purchase all or any part of your notes 30 business days after the occurrence of
a change in control at a purchase price equal to 100% of the principal amount of
the notes plus accrued and unpaid interest to, but excluding, the purchase date.
Notes submitted for purchase must be in $1,000 or multiples of $1,000 principal
amount.
We shall mail to the trustee and to each holder a written notice of the
change in control within 10 business days after the occurrence of a chance in
control. This notice shall state:
o the terms and conditions of the change in control;
o the procedures required for exercise of the change in control; and
o the holder's right to require RFMD to purchase the notes.
You must deliver written notice of your exercise of this purchase right to a
paying agent at any time prior to the close of business on the business day
prior to the change in control purchase date. The written notice must specify
the notes for which the purchase right is being exercised. If you wish to
withdraw this election, you must provide a written notice of withdrawal to the
paying agent at any time prior to the close of business on the business day
prior to the change in control purchase date.
A change in control will be deemed to have occurred if any of the following
occurs:
o any "person" or "group" is or becomes the "beneficial owner," directly
or indirectly, of shares of voting stock of RFMD representing 50% or
more of the total voting power of all outstanding classes of voting
stock of RFMD or has the power, directly or indirectly, to elect a
majority of the members of the board of directors of RFMD;
o RFMD consolidates with, or merges with or into, another person or RFMD
sells, assigns, conveys, transfers, leases or otherwise disposes of all
or substantially all of the assets of RFMD, or any person consolidates
with, or merges with or into, RFMD, in any such event other than
pursuant to a transaction in which the persons that "beneficially
owned," directly or indirectly, the shares of voting stock of RFMD
immediately prior to such transaction "beneficially own," directly or
indirectly, shares of voting stock of RFMD, representing at least a
majority of the total voting power of all outstanding classes of voting
stock of the surviving or transferee person; or
o RFMD is dissolved or liquidated.
However, a change in control will not be deemed to have occurred if either:
o the last sale price of our common stock for any five trading days during
the ten trading days immediately preceding the change in control is at
least equal to 105% of the conversion price in effect on such day; or
o in the case of a merger or consolidation, all of the consideration
excluding cash payments for fractional shares in the merger or
consolidation constituting the change in control consists of common
stock traded on a United States national securities exchange or quoted
on the Nasdaq National Market (or which will be so traded or quoted when
issued or exchanged in connection with such change in control) and as a
result of such transaction or transactions the notes become convertible
solely into such common stock.
For purposes of this change in control definition:
o "person" or "group" have the meanings given to them for purposes of
Sections 13(d) and 14(d) of the Exchange Act or any successor
provisions, and the term "group" includes any group acting for the
purpose of acquiring, holding or disposing of securities within the
meaning of Rule 13d-5(b)(1) under the Exchange Act, or any successor
provision;
o a "beneficial owner" will be determined in accordance with Rule 13d-3
under the Exchange Act, as in effect on the date of the indenture,
except that the number of shares of voting stock of RFMD will be deemed
to include, in addition to all outstanding shares of voting stock of
RFMD and unissued shares deemed to be held by the "person" or "group" or
other person with respect to which the change in control determination
is being made, all unissued shares deemed to be held by all other
persons;
o "beneficially owned" has a meaning correlative to that of beneficial
owner;
o "unissued shares" means shares of voting stock not outstanding that are
subject to options, warrants, rights to purchase or conversion
privileges exercisable within 60 days of the date of determination of a
change in control; and
o "voting stock" means any class or classes of capital stock pursuant to
which the holders of capital stock under ordinary circumstances have the
power to vote in the election of the board of directors, managers or
trustees of any person or other persons performing similar functions
irrespective of whether or not, at the time, capital stock of any other
class or classes shall have, or might have, voting power by reason of
the happening of any contingency.
The term "all or substantially all" as used in the definition of change in
control will likely be interpreted under applicable state law and will be
dependent upon particular facts and circumstances. There may be a degree of
uncertainty in interpreting this phrase. As a result, we cannot assure you how a
court would interpret this phrase under applicable law if you elect to exercise
your rights following the occurrence of a transaction which you believe
constitutes a transfer of "all or substantially all" of our assets.
We will under the indenture:
o comply with the provisions of Rule 13e-4 and Rule 14e-1, if applicable,
under the Exchange Act;
o file a Schedule TO or any successor or similar schedule if required
under the Exchange Act; and
o otherwise comply with all federal and state securities laws in
connection with any offer by us to purchase the notes upon a change in
control.
This change in control purchase feature may make more difficult or
discourage a takeover of RFMD and the removal of incumbent management. However,
we are not aware of any specific effort to accumulate shares of our common stock
or to obtain control of us by means of a merger, tender offer, solicitation or
otherwise. In addition, the change in control purchase feature is not part of a
plan by management to adopt a series of anti-takeover provisions. Instead, the
change in control purchase feature is a result of negotiations between us and
the initial purchasers.
We could, in the future, enter into certain transactions, including
recapitalizations, that would not constitute a change in control but would
increase the amount of debt, including senior indebtedness, outstanding or
otherwise adversely affect a holder. Neither we nor our subsidiaries are
prohibited from incurring debt, including senior indebtedness, under the
indenture. The incurrence of significant amounts of additional debt could
adversely affect our ability to service our debt, including the notes.
If a change in control were to occur, we may not have sufficient funds to
pay the change in control purchase price for the notes tendered by holders. In
addition, we may in the future incur debt that has similar change of control
provisions that permit holders of this debt to accelerate or require us to
repurchase this debt upon the occurrence of events similar to a change in
control. Our failure to repurchase the notes upon a change in control will
result in an event of default under the indenture, whether or not the purchase
is permitted by the subordination provisions of the indenture.
EVENTS OF DEFAULT
Each of the following will constitute an event of default under the
indenture:
(1) we fail to pay principal or premium, if any, on any note when due,
whether or not prohibited by the subordination provisions of the
indenture;
(2) we fail to pay any interest on any note when due if such failure
continues for 30 days, whether or not prohibited by the subordination
provisions of the indenture;
(3) we fail to perform any other covenant required of us in the indenture if
such failure continues for 60 days after notice is given in accordance
with the indenture; or
(4) certain events in bankruptcy, insolvency or reorganization of RFMD.
If an event of default, other than an event of default described in clause
(4) above, occurs and is continuing, either the trustee or the holders of at
least 25% in aggregate principal amount of the outstanding notes may declare the
principal amount of the notes to be due and payable immediately. If an event of
default described in clause (4) above occurs, the principal amount of the notes
will automatically become immediately due and payable. Any payment by us on the
notes following any such acceleration will be subject to the subordination
provisions described above.
After any such acceleration, but before a judgment or decree based on
acceleration, the holders of a majority in aggregate principal amount of the
notes may, under certain circumstances, rescind and annul such acceleration if
all events of default, other than the non-payment of accelerated principal, have
been cured or waived.
Subject to the trustee's duties in the case of an event of default, the
trustee will not be obligated to exercise any of its rights or powers at the
request of the holders, unless the holders have offered to the trustee
reasonable indemnity. Subject to the trustee's indemnification, the holders of a
majority in aggregate principal amount of the outstanding notes will have the
right to direct the time, method and place of conducting any proceeding for any
remedy available to the trustee or exercising any trust or power conferred on
the trustee with respect to the notes.
No holder will have any right to institute any proceeding under the
indenture, or for the appointment of a receiver or a trustee, or for any other
remedy under the indenture unless:
o the holder has previously given to the trustee written notice of a
continuing event of default;
o the holders of at least 25% in aggregate principal amount of the
outstanding notes have made a written request and have offered
reasonable indemnity to the trustee to institute such proceeding as
trustee; and
o the trustee has failed to institute such proceeding, and has not
received from the holders of a majority in aggregate principal amount of
the outstanding notes a direction inconsistent with such request within
60 days after such notice, request and offer.
However, these limitations do not apply to a suit instituted by a holder for
the enforcement of payment of the principal of or any premium or interest on any
note or the right to convert the note on or after the applicable due date.
Generally, the holders of not less than a majority of the aggregate
principal amount of outstanding notes may waive any default or event of default
unless:
o we fail to pay principal, premium or interest on any note when due;
o we fail to convert any note into common stock; or
o we fail to comply with any of the provisions of the indenture that would
require the consent of the holder of each outstanding note affected.
We are required to furnish to the trustee, on an annual basis, a statement
by our officers as to whether or not RFMD, to the officer's knowledge, is in
default in the performance or observance of any of the terms, provisions and
conditions of the indenture, specifying any known defaults.
MODIFICATION AND WAIVER
We and the trustee may make modifications and amendments to the indenture
with the consent of the holders of a majority in aggregate principal amount of
the outstanding notes.
However, neither we nor the trustee may make any modification or amendment
without the consent of the holder of each outstanding note if such modification
or amendment would:
o change the stated maturity of the principal of or interest on any note;
o reduce the principal amount of, or any premium or interest on, any note;
o reduce the amount of principal payable upon acceleration of the maturity
of any note;
o change the place or currency of payment of principal of, or any premium
or interest on, any note;
o impair the right to institute suit for the enforcement of any payment on,
or with respect to, any note;
o modify the subordination provisions in a manner materially adverse to the
holders of notes;
o adversely affect the right of holders to convert notes other than as
provided in or under the indenture;
o reduce the percentage in principal amount of outstanding notes required
for modification or amendment of the indenture;
o reduce the percentage in principal amount of outstanding notes necessary
for waiver of compliance with certain provisions of the indenture or for
waiver of certain defaults; or
o modify such provisions with respect to modification and waiver.
CONSOLIDATION, MERGER AND SALE OF ASSETS
We may not consolidate with or merge into any other person, in a transaction
in which we are not the surviving corporation, or convey, transfer or lease our
properties and assets substantially as an entirety to any successor person,
unless:
o the successor person, if any, is a corporation, limited liability
company, partnership, trust or other entity organized and existing under
the laws of the United States, or any state of the United States, and
assumes our obligations on the notes and under the indenture;
o immediately after giving effect to the transaction, no default or event
of default shall have occurred and be continuing; and
o other conditions specified in the indenture are met.
REGISTRATION RIGHTS
The following summary of the registration rights provided in the
registration rights agreement and the notes is not complete. You should refer to
the registration rights agreement and the notes for a full description of the
registration rights that apply to the notes.
RFMD has agreed to file a shelf registration statement under the Securities
Act within 90 days after the latest date of original issuance of the notes to
register resales of the notes and the shares of common stock into which the
notes are convertible, referred to as registrable securities. RFMD will use
reasonable efforts to have this shelf registration statement declared effective
within 180 days after the latest date of original issuance of the notes, and to
keep it effective until the earliest of:
(1) two years after the filing date;
(2) the date when all registrable securities shall have been registered
under the Securities Act and disposed of; and
(3) the date on which all registrable securities are eligible to be sold to
the public pursuant to Rule 144(k) under the Securities Act.
A holder of registrable securities that sells registrable securities
pursuant to the shelf registration statement generally will be required to
provide information about itself and the specifics of the sale, be named as a
selling security holder in the related prospectus and deliver a prospectus to
purchasers, be subject to relevant civil liability provisions under the
Securities Act in connection with such sales and be bound by the provisions of
the registration rights agreements which are applicable to such holder.
If:
(1) on or prior to the 90th day after the first date of original issuance of
the notes, the shelf registration statement has not been filed with the
SEC;
(2) on or prior to the 180th day after the latest date of original issuance
of the notes, the shelf registration statement has not been declared
effective by the SEC;
(3) we fail with respect to a note holder that supplies the questionnaire
described below to supplement the shelf registration statement in a
timely manner in order to name additional selling securities holders; or
(4) after the shelf registration statement has been declared effective, such
shelf registration statement ceases to be effective or usable (subject
to certain exceptions) in connection with resales of notes and the
common stock issuable upon the conversion of the notes in accordance
with and during the periods specified in the registration rights
agreement;
(each such event referred to in clauses (1) through (4), a registration
default), additional interest will accrue on the notes and underlying common
stock that are registrable securities over and above the rate set forth in the
title of the notes, from and including the date on which any such registration
default shall occur to but excluding the date on which all registration defaults
have been cured, at the rate of 0.5% per year for the notes (or an equivalent
amount for any common stock issued upon conversion of the notes that are
registrable securities). We will have no other liabilities for monetary damages
with respect to our registration obligations. With respect to each holder, our
obligations to pay additional interest remain in effect only so long as the
notes and the common stock issuable upon the conversion of the notes held by the
holder are "registrable securities" within the meaning of the registration
rights agreement.
We will pay all expenses of the shelf registration statement, provide each
holder that is selling registrable securities pursuant to the shelf registration
statement copies of the related prospectus and take other actions as are
required to permit, subject to the foregoing, unrestricted resales of the
registrable securities.
SATISFACTION AND DISCHARGE
We may discharge our obligations under the indenture while notes remain
outstanding if (1) all outstanding notes will become due and payable at their
scheduled maturity within one year or (2) all outstanding notes are scheduled
for redemption within one year, and, in either case, we have deposited with the
trustee an amount sufficient to pay and discharge all outstanding notes on the
date of their scheduled maturity or the scheduled date of redemption.
TRANSFER AND EXCHANGE
We have initially appointed the trustee as security registrar, paying agent
and conversion agent, acting through its corporate trust office. We reserve the
right to:
o vary or terminate the appointment of the security registrar, paying
agent or conversion agent;
o appoint additional paying agents or conversion agents; or
o approve any change in the office through which any security registrar
or any paying agent or conversion agent acts.
PURCHASE AND CANCELLATION
All notes surrendered for payment, redemption, registration of transfer or
exchange or conversion shall, if surrendered to any person other than the
trustee, be delivered to the trustee. All notes delivered to the trustee shall
be cancelled promptly by the trustee. No notes shall be authenticated in
exchange for any notes cancelled as provided in the indenture.
We may, to the extent permitted by law, purchase notes in the open market or
by tender offer at any price or by private agreement. Any notes purchased by us
may, to the extent permitted by law, be reissued or resold or may, at our
option, be surrendered to the trustee for cancellation. Any notes surrendered
for cancellation may not be reissued or resold and will be promptly cancelled.
REPLACEMENT OF NOTES
We will replace mutilated, destroyed, stolen or lost notes at your expense
upon delivery to the trustee of the mutilated notes, or evidence of the loss,
theft or destruction of the notes satisfactory to us and the trustee. In the
case of a lost, stolen or destroyed note, indemnity satisfactory to the trustee
and us may be required at the expense of the holder of such note before a
replacement note will be issued.
GOVERNING LAW
The indenture and the notes will be governed by, and construed in accordance
with, the law of the State of New York, without regard to conflicts of laws
principles.
CONCERNING THE TRUSTEE
First Union National Bank has agreed to serve as the trustee under the
indenture. The trustee will be permitted to deal with RFMD and any affiliate of
RFMD with the same rights as if it were not trustee. However, under the Trust
Indenture Act, if the trustee acquires any conflicting interest and there exists
a default with respect to the notes, the trustee must eliminate such conflicts
or resign. First Union National Bank is the lender and agent for other lenders
under an existing lease financing arrangement that RFMD expects to use for the
construction of the first phase of its second water fabrication facility.
The holders of a majority in principal amount of all outstanding notes will
have the right to direct the time, method and place of conducting any proceeding
for exercising any remedy or power available to the trustee. However, any such
direction may not conflict with any law or the indenture, may not be unduly
prejudicial to the rights of another holder or the trustee and may not involve
the trustee in personal liability.
BOOK-ENTRY, DELIVERY AND FORM
We initially issued the notes in the form of one global security. The global
security was deposited with the trustee as custodian for DTC and registered in
the name of a nominee of DTC. Except as set forth below, the global security may
be transferred, in whole and not in part, only to DTC or another nominee of DTC.
You may hold your beneficial interests in the global security directly through
DTC if you have an account with DTC or indirectly through organizations which
have accounts with DTC. Notes in definitive certificated form (called
"certificated securities") will be issued only in certain limited circumstances
described below.
DTC has advised us that it is:
o a limited purpose trust company organized under the laws of the State
of New York;
o a member of the Federal Reserve System;
o a "clearing corporation" within the meaning of the New York Uniform
Commercial Code; and
o a "clearing agency" registered pursuant to the provisions of Section
17A of the Exchange Act.
DTC was created to hold securities of institutions that have accounts with
DTC (called "participants") and to facilitate the clearance and settlement of
securities transactions among its participants in such securities through
electronic book-entry changes in accounts of the participants, thereby
eliminating the need for physical movement of securities certificates. DTC's
participants include securities brokers and dealers, which may include the
initial purchasers, banks, trust companies, clearing corporations and certain
other organizations. Access to DTC's book-entry system is also available to
others such as banks, brokers, dealers and trust companies (called, the
"indirect participants") that clear through or maintain a custodial relationship
with a participant, whether directly or indirectly.
Pursuant to procedures established by DTC, upon the deposit of the global
security with DTC, DTC credited, on its book-entry registration and transfer
system, the principal amount of notes represented by such global security to the
accounts of participants. The accounts to be credited were designated by the
initial purchasers. Ownership of beneficial interests in the global security is
limited to participants or persons that may hold interests through participants.
Ownership of beneficial interests in the global security is shown on, and the
transfer of those ownership interests may be effected only through, records
maintained by DTC (with respect to participants' interests), the participants
and the indirect participants. The laws of some jurisdictions may require that
certain purchasers of securities take physical delivery of such securities in
definitive form. These limits and laws may impair the ability to transfer or
pledge beneficial interests in the global security.
Beneficial owners of interests in global securities who desire to convert
their interests into common stock should contact their brokers or other
participants or indirect participants through whom they hold such beneficial
interests to obtain information on procedures, including proper forms and
cut-off times, for submitting requests for conversion.
So long as DTC, or its nominee, is the registered owner or holder of a
global security, DTC or its nominee, as the case may be, will be considered the
sole owner or holder of the notes represented by the global security for all
purposes under the indenture and the notes. In addition, no beneficial owner of
an interest in a global security will be able to transfer that interest except
in accordance with the applicable procedures of DTC. Except as set forth below,
as an owner of a beneficial interest in the global security, you will not be
entitled to have the notes represented by the global security registered in your
name, will not receive or be entitled to receive physical delivery of
certificated securities and will not be considered to be the owner or holder of
any notes under the global security. We understand that under existing industry
practice, if an owner of a beneficial interest in the global security desires to
take any action that DTC, as the holder of the global security, is entitled to
take, DTC would authorize the participants to take such action, and the
participants would authorize beneficial owners owning through such participants
to take such action or would otherwise act upon the instructions of beneficial
owners owning through them.
We will make payments of principal of, premium, if any, and interest on the
notes represented by the global security registered in the name of and held by
DTC or its nominee to DTC or its nominee, as the case may be, as the registered
owner and holder of the global security. Neither we, the trustee nor any paying
agent will have any responsibility or liability for any aspect of the records
relating to or payments made on account of beneficial ownership interests in the
global security or for maintaining, supervising or reviewing any records
relating to such beneficial ownership interests.
We expect that DTC or its nominee, upon receipt of any payment of principal
of, premium, if any, or interest on the global security, will credit
participants' accounts with payments in amounts proportionate to their
respective beneficial interests in the principal amount of the global security
as shown on the records of DTC or its nominee. We also expect that payments by
participants or indirect participants to owners of beneficial interests in the
global security held through such participants or indirect participants will be
governed by standing instructions and customary practices and will be the
responsibility of such participants or indirect participants. We will not have
any responsibility or liability for any aspect of the records relating to, or
payments made on account of, beneficial ownership interests in the global
security for any note or for maintaining, supervising or reviewing any records
relating to such beneficial ownership interests or for any other aspect of the
relationship between DTC and its participants or indirect participants or the
relationship between such participants or indirect participants and the owners
of beneficial interests in the global security owning through such participants.
Transfers between participants in DTC will be effected in the ordinary way
in accordance with DTC rules and will be settled in same-day funds.
DTC has advised us that it will take any action permitted to be taken by a
holder of notes only at the direction of one or more participants to whose
account the DTC interests in the global security is credited and only in respect
of such portion of the aggregate principal amount of notes as to which such
participant or participants has or have given such direction. However, if DTC
notifies us that they are unwilling to be a depository for the global security
or ceases to be a clearing agency or there is an event of default under the
notes, DTC will exchange the global security for certificated securities which
it will distribute to its participants and which will be legended, if required,
as set forth under the heading "Transfer Restrictions."
Although DTC is expected to follow the foregoing procedures in order to
facilitate transfers of interests in the global security among participants of
DTC, they are under no obligation to perform or continue to perform such
procedures, and such procedures may be discontinued at any time. Neither we nor
the trustee will have any responsibility or liability for the performance by DTC
or the participants or indirect participants of their respective obligations
under the rules and procedures governing their respective operations.
DESCRIPTION OF THE CAPITAL STOCK
AUTHORIZED CAPITAL STOCK
Our authorized capital stock consists of 500,000,000 shares of common stock,
no par value, and 5,000,000 shares of preferred stock, no par value.
Common Stock
The holders of common stock are entitled to one vote per share on all
matters on which the holders of common stock are entitled to vote and do not
have cumulative voting rights in the election of directors. Holders of common
stock are entitled to receive dividends as may be declared by our board of
directors out of funds legally available therefor. In the event of the
liquidation, dissolution or winding up of RFMD, holders of common stock will be
entitled to share ratably in the assets, if any, available for distribution
after payment of all creditors and the liquidation preferences on any
outstanding shares of preferred stock. Holders of common stock have no
preemptive rights to subscribe for any additional securities of any class we may
issue, nor any conversion, redemption or sinking fund rights. The rights and
privileges of holders of common stock are subject to the preferences of any
shares of preferred stock that we may issue in the future.
As of October 31, 2000, 162,225,454 shares of common stock were outstanding.
Preferred Stock
Our board of directors has the authority to issue up to 5,000,000 shares of
preferred stock in one or more classes or series and to establish, from time to
time, the number of shares to be included in each class or series, and to
determine the designation, powers, preferences and rights of the shares of each
such class or series and any qualifications, limitations or restrictions of such
class or series, and to increase or decrease the number of shares of any such
class or series without any further vote or action by the shareholders. Any
preferred stock issued by our board of directors may rank senior to the common
stock with respect to the payment of dividends or amounts upon liquidation,
dissolution or winding up of RFMD, or both. In addition, any such shares of
preferred stock may have class or series voting rights. Moreover, under certain
circumstances, the issuance of preferred stock or the existence of the unissued
preferred stock may tend to discourage or make more difficult a merger or other
change in control of RFMD.
Currently, no shares of preferred stock are outstanding.
TRW Warrants
We issued two warrants to TRW in November 1999. These warrants have been
assigned an aggregate value of $10 million. The first warrant entitles TRW to
purchase up to 500,000 shares of our common stock. It is exercisable at any time
after December 31, 2000 and expires on June 30, 2001. The second warrant
entitles TRW to purchase up to 1,000,000 shares of our common stock. It becomes
exercisable at any time after December 31, 2000 and expires December 31, 2001,
except that this warrant will not become exercisable, and will be forfeited, if
we do not reach a defined annualized sales target of products through use of
expanded license rights granted to us by TRW. The exercise price of both
warrants is equal to 75% of the average closing prices of our common stock
during the ten trading days immediately preceding December 31, 2000.
CERTAIN PROVISIONS OF OUR ARTICLES OF INCORPORATION AND BYLAWS
General
A number of provisions of our articles of incorporation and bylaws deal with
matters of corporate governance and the rights of our shareholders. Some of
these provisions may be deemed to have an anti-takeover effect and may delay or
prevent takeover attempts not first approved by our board of directors
(including takeovers that certain shareholders may deem to be in their best
interests). These provisions also could delay or frustrate the removal of
incumbent directors or the assumption of control by shareholders. We believe
that these provisions are appropriate to protect the interests of RFMD and all
of our shareholders.
Certain Business Combinations
Our articles of incorporation require that any business combination, as
defined in our articles, to be entered into by RFMD with a person or entity
beneficially owning 15% or more of our outstanding voting shares (an "Interested
Shareholder") be approved by the affirmative vote of the holders of at least 60%
of the outstanding voting shares, other than shares held by such Interested
Shareholder, or, alternatively, by a majority of certain members of our board of
directors not affiliated with such Interested Shareholder. The business
combinations that are subject to these provisions include a merger or share
exchange with an Interested Shareholder, certain sales to an Interested
Shareholder of assets of RFMD and certain issuances or transfers to an
Interested Shareholder by RFMD or any of its subsidiaries of equity securities
of RFMD or such subsidiary. These provisions will make a takeover of RFMD more
difficult and may have the effect of diminishing the possibility of certain
types of "front-end loaded" acquisitions of RFMD or other unsolicited attempts
to acquire RFMD.
Advance Notice Requirements for Shareholder Proposals and Director
Nominations
Our bylaws provide that a special meeting of shareholders may be called only
by the board of directors and certain designated officers of RFMD. Our meetings
may not be called by the shareholders. Our bylaws establish advance notice
procedures for shareholder proposals and the nomination, other than by or under
the direction of the board of directors or a committee of the board of
directors, of candidates for election as directors. These procedures provide
that the notice of shareholder proposals and shareholder nominations for the
election of directors must be in writing, contain certain specified information
and be received by the Secretary of RFMD (a) in the case of an annual meeting
that is called for a date that is within 30 days before or after the anniversary
date of the immediately preceding annual meeting of shareholders, not less than
60 days nor more than 90 days prior to such anniversary date; and (b) in the
case of an annual meeting that is called for a date that is not within 30 days
before or after the anniversary date of the immediately preceding annual meeting
or, in the case of a special meeting of shareholders, not later than the close
of business on the tenth day following the day on which notice of the date of
the meeting was mailed or public disclosure of the date of the meeting was made,
whichever occurs first. These provisions may preclude some shareholders from
bringing matters before the shareholders at any annual or special meeting,
including making nominations for directors.
Amendment of Articles and Bylaws
Subject to the North Carolina Business Corporation Act, our articles of
incorporation may be amended by the affirmative vote of a majority of the
outstanding voting shares, except that the amendment or repeal of certain
provisions of the articles relating to the shares which we shall have authority
to issue, the approval of certain business combinations as described above and
certain other matters require the affirmative vote of the holders of 60% of our
voting securities, other than securities held by an Interested Shareholder. The
articles further provide that certain provisions of the bylaws relating to the
size and composition of the board of directors and meetings of shareholders may
be amended by the shareholders, except in certain specified circumstances, only
by the affirmative vote of the holders of 60% of the outstanding voting shares,
other than securities held by an Interested Shareholder. Moreover, the articles
provide that the board of directors may repeal, amend or adopt any bylaw
adopted, amended or repealed by the shareholders. These provisions will make it
more difficult for shareholders to amend the articles or bylaws.
Anti-takeover Legislation
Pursuant to our articles of incorporation, we have elected not to be
governed by the North Carolina Control Share Act, which restricts the right of
certain shareholders who acquire specified amounts of the common stock from
voting those shares without certain approval by other shareholders of RFMD, and
the North Carolina Shareholder Protection Act, which imposes certain
requirements for approval of transactions between us and a shareholder
beneficially owning in excess of 20% of the common stock.
REGISTRATION RIGHTS
We have given some of our initial investors, including TRW, certain rights
regarding the registration under the Securities Act of the sale of shares that
they acquired before our initial public offering. Generally, if we propose to
register the underwritten sale of any common stock for our own account or the
account of others, these investors are entitled to include their shares in the
registration at our expense. Also, they have the right to request that we, at
our expense, effect an unlimited number of registrations on Form S-3 (but no
more than one registration every six months) for any sale of shares covered by
the registration rights agreement having a proposed aggregate offering price of
at least $500,000. We must use our best efforts to effect these registrations.
TRANSFER AGENT AND REGISTRAR
First Union National Bank serves as the transfer agent and registrar for our
common stock.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
This section summarizes some of the U.S. federal income tax considerations
relating to the purchase, ownership, and disposition of the notes and of common
stock into which the notes may be converted. This summary does not provide a
complete analysis of all potential tax considerations. The information provided
below is based on existing authorities, and we have not sought, nor do we intend
to obtain, any ruling from the Internal Revenue Service (the "IRS") with respect
to the statements made and the conclusions reached in the following summary.
These authorities may change, or the IRS might interpret the existing
authorities differently. In either case, the tax consequences of purchasing,
owning or disposing of notes or common stock could differ from those described
below. The summary generally applies only to "U.S. Holders" that purchase notes
in the initial offering at their issue price and hold the notes or common stock
as "capital assets" (generally, for investment). For this purpose, U.S. Holders
include citizens or residents of the United States and corporations organized
under the laws of the United States or any state. Trusts are U.S. Holders if
they are subject to the primary supervision of a U.S. court and the control of
one or more U.S. persons. Special rules apply to nonresident alien individuals
and foreign corporations or trusts ("Non-U.S. Holders"). This summary describes
some, but not all, of these special rules. For U.S. federal income tax purposes,
income earned through a foreign or domestic partnership or similar entity is
attributed to its owners. The summary generally does not address tax
considerations that may be relevant to particular investors because of their
specific circumstances, or because they are subject to special rules, such as,
for example, banks, tax-exempt organizations, insurance companies, dealers in
securities or currencies, or persons that hold the notes or common stock as a
position in a hedging transaction, or "straddle" or "conversion transaction" for
tax purposes. Finally, the summary does not describe the effect of the federal
estate and gift tax laws on U.S. Holders or the effects of any applicable
foreign, state, or local laws.
INVESTORS CONSIDERING THE PURCHASE OF NOTES SHOULD CONSULT THEIR OWN TAX
ADVISORS REGARDING THE APPLICATION OF THE U.S. FEDERAL INCOME TAX LAWS TO THEIR
PARTICULAR SITUATIONS AND THE CONSEQUENCES OF FEDERAL ESTATE OR GIFT TAX LAWS,
FOREIGN, STATE, OR LOCAL LAWS, AND TAX TREATIES.
U.S. HOLDERS
Taxation of Interest
U.S. Holders will be required to recognize as ordinary income any interest
paid or accrued on the notes, in accordance with their regular method of
accounting for United States federal income tax purposes. In general, if a
holder of a debt instrument may receive payments of other than fixed periodic
interest that exceed the issue price of the instrument, the holder may be
required to recognize additional interest as "original issue discount" over the
term of the instrument. We believe that the notes will not be issued with
original issue discount. If the price of our common stock exceeds 150% of the
conversion price of the notes during a prescribed period, and certain other
conditions are met regarding the registration of the notes and common stock, we
will be able to call the notes for redemption at a price that will include an
additional amount in excess of their principal amount. The original issue
discount regulations allow contingent payments such as this to be disregarded in
computing a holder's interest income if the contingency is either "incidental"
or "remote." If we exercise our provisional redemption right, it is likely that
holders of the notes would convert them into common stock. Therefore, we believe
that the possibility that we will pay the prescribed redemption premium is
remote. Our determination that this contingency is incidental or remote is
binding on holders unless they disclose their contrary position. Any such
determination, however, would not be binding upon a taxing authority. If we pay
a redemption premium in connection with our exercise of our provisional
redemption right, the premium would most likely be treated as capital gain under
the rules described under "U.S. Holders -- Sale, Exchange or Redemption of the
Notes."
Under the terms of the notes, if a noteholder converts a note to our common
stock after the record date but prior to the interest payment date, the
noteholder is obligated to pay us funds equal to the interest payable on the
converted principal amount. The tax consequences to the noteholder of the
receipt and repayment of interest are uncertain. We believe that neither the
receipt nor the repayment should be taken into account in computing the
noteholder's taxable income. A taxing authority, however, may require the
noteholder to recognize ordinary income in an amount equal to the interest
received. In that case, the noteholder should be allowed an offsetting deduction
for the repayment. The noteholder, however, may be required to capitalize
(rather than deduct) the repaid interest payment as an addition to tax basis in
the common stock received in the conversion.
Sale, Exchange or Redemption of the Notes
A U.S. Holder will generally recognize capital gain or loss if the holder
disposes of a note in a sale, redemption or exchange other than a conversion of
the note into common stock. The holder's gain or loss will equal the difference
between the proceeds received by the holder and the holder's adjusted tax basis
in the note. The proceeds received by the holder will include the amount of any
cash and the fair market value of any other property received for the note. The
holder's tax basis in the note will generally equal the amount the holder paid
for the note. The gain or loss recognized by a holder on a disposition of the
note will be long-term capital gain or loss if the holder held the note for more
than one year. Long-term capital gains of individual taxpayers are generally
taxed at a maximum rate of 20 percent. The deductibility of capital losses is
subject to limitation. Net capital gains of corporations are subject to tax at
the same rates as ordinary income, with a maximum federal tax rate of 35
percent.
The portion of any proceeds that is attributable to accrued interest will
not be taken into account in computing the holder's capital gain or loss.
Instead, that portion will be recognized as ordinary interest income to the
extent that the holder has not previously included the accrued interest in
income.
Conversion of the Notes
A U.S. Holder generally will not recognize any income, gain or loss on
converting a note into common stock. If the holder receives cash in lieu of a
fractional share of stock, however, the holder would be treated as if he
received the fractional share and then had the fractional share redeemed for the
cash. In general, the holder should recognize capital gain or loss equal to the
difference between the cash received and that portion of his basis in the stock
attributable to the fractional share. The holder's aggregate basis in the common
stock will equal his adjusted basis in the note. The holder's holding period for
the stock will include the period during which he held the note. A holder's
adjusted tax basis in shares of common stock considered attributable to accrued
interest as described above generally will equal the amount of such accrued
interest included in income, and the holding period for such shares shall not
include the period the converted notes were held.
Dividends
If, after a U.S. Holder converts a note into common stock, we make a
distribution in respect of that stock, the distribution will be treated as a
dividend, taxable to the U.S. Holder as ordinary income, to the extent it is
paid from our current or accumulated earnings and profits. If the distribution
exceeds our current and accumulated profits, the excess will be treated as a
tax-free return of the holder's investment, up to the holder's basis in his
common stock. Any remaining excess will be treated as capital gain. If the U.S.
Holder is a U.S. corporation, it would generally be able to claim a deduction
equal to a portion of any dividends received.
The terms of the notes allow for changes in the conversion price of the
notes in certain circumstances. A change in conversion price that allows
noteholders to receive more shares of common stock on conversion may increase
the noteholders' proportionate interest in our earnings and profits or assets.
In that case, noteholders would be treated as though they received a dividend in
the form of our stock. Such a constructive stock dividend would be taxable to
the noteholders even though they would not actually receive any cash or other
property. A taxable constructive stock dividend would result, for example, if
the conversion price is adjusted to compensate noteholders for distributions of
cash or property to our shareholders.
Not all changes in conversion price that allow noteholders to receive more
stock on conversion, however, increase the noteholders' proportionate interests
in RFMD. For instance, a change in conversion price could simply prevent the
dilution of the noteholders' interest upon a stock split or other change in
capital structure. Changes in this type, if made by a bona fide, reasonable
adjustment formula, are not treated as constructive stock dividends. Conversely,
if an event occurs that dilutes the noteholders' interests and the conversion
price is not adjusted, the resulting increase in the proportionate interests of
our shareholders could be treated as a taxable stock dividend to them. Any
taxable constructive stock dividends resulting from a change to, or failure to
change, the conversion price would be treated like dividends paid in cash or
other property. They would result in ordinary income to the recipient, to the
extent of our current or accumulated earnings and profits, with any excess
treated as a tax-free return of capital or as capital gain.
Sale of Common Stock
A U.S. Holder will generally recognize capital gain or loss on a sale or
exchange of common stock. The holder's gain or loss will equal the difference
between the proceeds received by the holder and the holder's adjusted tax basis
in the stock. The proceeds received by the holder will include the amount of any
cash and the fair market value of any other property received for the stock. The
gain or loss recognized by a holder on a sale or exchange of stock will be
long-term capital gain or loss if the holder held the stock for more than one
year.
SPECIAL TAX RULES APPLICABLE TO NON-U.S. HOLDERS
Taxation of Interest
Payments of interest to nonresident persons or entities are generally
subject to U.S. federal income tax at a rate of 30 percent (or at a lesser rate
if a tax treaty applies), collected by means of withholding by the payor.
Payments of interest on the notes to most Non-U.S. Holders, however, will
qualify as "portfolio interest," and thus will be exempt from the withholding
tax, if the holders certify their nonresident status as described below. The
portfolio interest exception will not apply to payments of interest to a
Non-U.S. Holder that
o owns, directly or indirectly, at least 10 percent of our voting stock,
or
o is a "controlled foreign corporation" that is related to us.
In general, a foreign corporation is a controlled foreign corporation if at
least 50 percent of its stock is owned, directly or indirectly, by one or more
U.S. persons that each owns, directly or indirectly, at least 10 percent of the
corporation's voting stock.
The portfolio interest exception and several of the special rules for
Non-U.S. Holders described below apply only if the holder certifies its
nonresident status. A Non-U.S. Holder can meet this certification requirement by
providing a Form W-8BEN or appropriate substitute form to us, or our paying
agent. If the holder holds the note through a financial institution or other
agent acting on the holder's behalf, the holder will be required to provide
appropriate documentation to the agent. The holder's agent will then be required
to provide certification to us or our paying agent, either directly or through
other intermediaries. For payments made to a foreign partnership after December
31, 2000, the certification requirements generally apply to the partners rather
than the partnership.
Sale, Exchange or Redemption of Notes
Non-U.S. Holders generally will not be subject to U.S. federal income tax on
any gain realized on the sale, exchange or other disposition of notes. This
general rule, however, is subject to several exceptions. For example, the gain
would be subject to U.S. federal income tax if
o the gain is effectively connected with the conduct by the Non-U.S.
Holder of a U.S. trade or business,
o the Non-U.S. Holder was a citizen or resident of the United States and
thus is subject to special rules that apply to expatriates, or
o the rules of the Foreign Investment in Real Property Tax Act ("FIRPTA")
(described below) treat the gain as effectively connected with a U.S.
trade or business.
The FIRPTA rules may apply to a sale, exchange or other disposition of notes
if we are, or were within five years before the transaction, a "U.S. real
property holding corporation" ("USRPHC"). In general, we would be a USRPHC if
interests in U.S. real estate comprised most of our assets. We do not believe
that we are a USRPHC or that we will become one in the future. The FIRPTA rules
would apply to a disposition of notes by a Non-U.S. Holder only if the holder
owned, directly or indirectly, more than 5 percent of our common stock within
five years before the holder's disposition of the notes. For this purpose, the
Non-U.S. Holder would be treated as owning the stock that the holder could
acquire on conversion of the holder's notes. If all of these conditions were
met, and the FIRPTA rules applied to the sale, exchange, or other disposition of
notes by a Non-U.S. Holder, then any gain recognized by the holder would be
treated as effectively connected with a U.S. trade or business, and would thus
be subject to U.S. federal income tax.
Conversion of the Notes
Non-U.S. Holder generally will not recognize any income, gain or loss on
converting a note into common stock. Any gain recognized as a result of the
holder's receipt of cash in lieu of a fractional share of stock would also
generally not be subject to U.S. federal income tax. See "Special Tax Rules
Applicable to Non-U.S. Holders -- Sale of Common Stock," below.
Dividends
Dividends paid to Non-U.S. Holder on common stock received on conversion of
a note will generally be subject to U.S. withholding tax at a 30 percent rate.
The withholding tax might not apply, however, or might apply at a reduced rate,
under the terms of a tax treaty between the United States and the Non-U.S.
Holder's country of residence. A Non-U.S. Holder must demonstrate its
entitlement to treaty benefits by certifying its nonresident status. Some of the
common means of meeting this requirement are described above under "Special Tax
Rules Applicable to Non-U.S. Holders -- Taxation of Interest."
Sale of Common Stock
Non-U.S. Holders will generally not be subject to U.S. federal income tax on
any gains realized on the sale, exchange, or other disposition of common stock.
This general rule, however, is subject to exceptions, some of which are
described under "Special Tax Rules Applicable to Non-U.S. Holders -- Sale,
Exchange or Redemption of Notes."
Income or Gains Effectively Connected With a U.S. Trade or Business
The preceding discussion of the tax consequences of the purchase, ownership
or disposition of notes or common stock by a Non-U.S. Holder assumes that the
holder is not engaged in a U.S. trade or business. If any interest on the notes,
dividends on common stock, or gain from the sale, exchange or other disposition
of the notes or stock is effectively connected with a U.S. trade or business
conducted by the Non-U.S. Holder, then the income or gain will be subject to
U.S. federal income tax at the regular graduated rates. If the Non-U.S. Holder
is eligible for the benefits of a tax treaty between the United States and the
holder's country of residence, any "effectively connected" income or gain will
be subject to U.S. federal income tax only if it is also attributable to a
permanent establishment maintained by the holder in the United States. Payments
of dividends that are effectively connected with a U.S. trade or business, and
therefore included in the gross income of a Non-U.S. Holder, will not be subject
to the 30 percent withholding tax. To claim exemption from withholding, the
holder must certify its qualification, which can be done by filing a Form
W-8ECI. If the Non-U.S. Holder is a corporation, that portion of its earnings
and profits that is effectively connected with its U.S. trade or business would
generally be subject to a "branch profits tax." The branch profits tax rate is
generally 30 percent, although an applicable tax treaty might provide for a
lower rate.
U.S. Federal Estate Tax
The estates of nonresident alien individuals are subject to U.S. federal
estate tax on property with a U.S. situs. The notes will not be U.S. situs
property as long as interest on the notes paid immediately before the death of
the holder would have qualified as portfolio interest, exempt from withholding
tax as described above under "Special Tax Rules Applicable to Non-U.S. Holders:
Taxation of Interest." Because we are a U.S. corporation, our common stock will
be U.S. situs property, and therefore will be included in the taxable estate of
a nonresident alien decedent. The U.S. federal estate tax liability of the
estate of a nonresident alien may be affected by a tax treaty between the United
States and the decedent's country of residence.
BACKUP WITHHOLDING AND INFORMATION REPORTING
The Internal Revenue Code of 1986, as amended, and the Treasury regulations
require those who make specified payments to report the payments to the IRS.
Among the specified payments are interest, dividends, and proceeds paid by
brokers to their customers. The required information returns enable the IRS to
determine whether the recipient properly included the payments in income. This
reporting regime is reinforced by "backup withholding" rules. These rules
require the payors to withhold tax at a 31 percent rate from payments subject to
information reporting if the recipient fails to cooperate with the reporting
regime by failing to provide his taxpayer identification number to the payor,
furnishing an incorrect identification number, or repeatedly failing to report
interest or dividends on his returns. The information reporting and backup
withholding rules do not apply to payments to corporations, whether domestic or
foreign.
Payments of interest or dividends to individual U.S. Holders of notes or
common stock will generally be subject to information reporting, and will be
subject to backup withholding unless the holder provides us or our paying agent
with a correct taxpayer identification number.
The information reporting and backup withholding rules do not apply to
payments that are subject to the 30 percent withholding tax on dividends or
interest paid to nonresidents, or to payments that are exempt from that tax by
application of a tax treaty or special exception. Therefore, payments of
dividends on common stock, or interest on notes, will generally not be subject
to information reporting or backup withholding. To avoid backup withholding on
dividends paid after December 31. 2000, a Non-U.S. Holder will have to certify
its nonresident status. Some of the common means of doing so are described under
"Special Rules Applicable to Non-U.S. Holders -- Taxation of Interest."
Payments made to U.S. Holders by a broker upon a sale of notes or common
stock will generally be subject to information reporting and backup withholding.
If, however, the sale is made through a foreign office of a U.S. broker, the
sale will be subject to information reporting but not backup withholding. If the
sale is made through a foreign office of a foreign broker, the sale will
generally not be subject to either information reporting or backup withholding.
This exception may not apply, however, if the foreign broker is owned or
controlled by U.S. persons, or is engaged in a U.S. trade or business.
Payments made to Non-U.S. Holders by a broker upon a sale of notes or common
stock will not be subject to information reporting or backup withholding as long
as the Non-U.S. Holder certifies its foreign status.
Any amounts withheld from a payment to a holder of notes or common stock
under the backup withholding rules can be credited against any U.S. federal
income tax liability of the holder.
THE PRECEDING DISCUSSION OF CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS
IS FOR GENERAL INFORMATION ONLY. IT IS NOT TAX ADVICE. EACH PROSPECTIVE INVESTOR
SHOULD CONSULT ITS OWN TAX ADVISOR REGARDING THE PARTICULAR U.S. FEDERAL, STATE,
LOCAL, AND FOREIGN TAX CONSEQUENCES OF PURCHASING, HOLDING, AND DISPOSING OF OUR
NOTES OR COMMON STOCK, INCLUDING THE CONSEQUENCES OF ANY PROPOSED CHANGE IN
APPLICABLE LAWS.
SELLING SECURITYHOLDERS
We originally issued the notes in a private placement in August 2000. The
notes were resold by the initial purchasers to qualified institutional buyers
under Rule 144A under the Securities Act and to a limited number of
institutional accredited investors as defined in Rule 501(a)(1), (2), (3) or (7)
under the Securities Act in transactions exempt from registration under the
Securities Act. Selling securityholders may offer and sell the notes and the
underlying common stock pursuant to this prospectus.
The following table contains information as of October 31, 2000, with
respect to the selling securityholders and the principal amount of notes and the
underlying common stock beneficially owned by each selling security holder that
may be offered using this prospectus.
<TABLE>
<CAPTION>
Principal
Amount of
Maturity Number of
of Notes Shares of
Beneficially Percentage Common Stock Percentage of
Owned that of Notes that May be Common Stock
May be Sold Outstanding Sold (1) Outstanding (2)
----------------------------- ----------- ----------- -------- ---------------
Name
----
<S> <C> <C> <C> <C>
Tribeca Investments LLC..................... $25,500,000 8.5 565,598 *
399 Park Avenue, 7th Floor
New York, NY 10022
Federated Equity Income Fund, Inc.
c/o Federated Investors, Inc................ $21,700,000 7.2 481,313 *
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Robertson Stephens.......................... $15,000,000 5.0 332,704 *
555 California Street, 24th Floor
San Francisco, CA 94104
CIBC World Markets (3)...................... $11,780,000 3.9 261,284 *
200 Liberty Street, 8th Floor
New York, NY 10281
JMG Triton Offshore Fund, Ltd............... $10,500,000 3.5 232,893 *
1999 Avenue of the Stars, Suite 2530
Los Angeles, CA 90067
Argent Classic Convertible Arbitrage Fund
(Bermuda) L.P............................... $8,000,000 2.7 177,442 *
73 Front Street, Hamilton HM 12 Bermuda
P.O. Box HM 3013
Hamilton HMMX Bermuda
St. Albans Partners Ltd..................... $6,000,000 2.0 133,081 *
c/o Camden Asset Management, LP
2049 Century Park East, Suite 330
Los Angeles, CA 90067
JMG Capital Partners LP..................... $4,250,000 1.4 94,266 *
1999 Avenue of the Stars, Suite 2530
Los Angeles, CA 90067
Retail Clerks Pension Trust................. $2,000,000 * 44,360 *
c/o Camden Asset Management, LP
2049 Century Park East, Suite 330
Los Angeles, CA 90067
Retail Clerks Pension Trust #2.............. $2,000,000 * 44,360 *
c/o Camden Asset Management, LP
2049 Century Park East, Suite 330
Los Angeles, CA 90067
Grace Brothers, Ltd......................... $1,500,000 * 33,270 *
1560 Sherman Ave.
Suite 900
Evanston, IL 60201
Federated Equity Funds, on behalf of its
Federated Capital Appreciation Fund......... $1,160,000 * 25,729 *
c/o Federated Investors, Inc.
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Pine Grove Enhanced Partners, LP............ $1,000,000 * 22,180 *
c/o Camden Asset Management, LP
2049 Century Park East, Suite 330
Los Angeles, CA 90067
Federated Insurance Series, on behalf of its
Federated Equity Income Fund II............. $755,000 * 16,746 *
c/o Federated Investors, Inc.
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Minnesota Power Inc......................... $750,000 * 16,635 *
30 W. Superior Street
Duluth, MN 55802
Goldman Sachs and Company................... $500,000 * 11,090 *
180 Maiden Lane, 41st Floor
New York, NY 10038
McMahan Securities Co. L.P.................. $500,000 * 11,090 *
181 Harbor Drive
Stamford, CT 06902-7474
Nationwide Family of Funds, on behalf of its
Nationwide Equity Income Fund............... $335,000 * 7,430 *
c/o Federated Investors, Inc.
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Ohio National Equity Income Portfolio, on
behalf of its Ohio National Fund, Inc....... $50,000 * 1,109 *
c/o Federated Investors, Inc.
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Any other holder of notes or future
transferee, pledgee, donee or successor
(4)(5) .....................................
</TABLE>
[FN]
--------------
* Less than 1%
(1) Assumes conversion of all of the holder's notes at a conversion price
of $45.085 per share of common stock. However, this conversion price will be
subject to adjustment as described under "Description of Notes--Right of
Conversion." As a result, the amount of common stock issuable upon conversion of
the notes may increase or decrease in the future.
(2) Calculated based on Rule 13d-3(d)(i) of the Exchange Act using
162,225,454 shares of common stock outstanding as of October 31, 2000. In
calculating this amount, we treated as outstanding the number of shares of
common stock issuable upon conversion of all of that particular holder's notes.
However, we did not assume the conversion of any other holder's notes.
(3) CIBC World Markets has acted as an underwriter for an issuance of our
securities within the past three years.
(4) Information about other selling security holders will be set forth in
prospectus supplements, if required.
(5) Assumes that any other holders of notes, or any future transferees,
pledgees, donees or successors of or from any such other holders of notes, do
not beneficially own any common stock other than the common stock issuable upon
conversion of the notes at the initial conversion rate.
</FN>
We prepared this table based on the information supplied to us by the
selling securityholders named in the table.
The selling securityholders listed in the above table may have sold or
transferred, in transactions exempt from the registration requirements of the
Securities Act, some or all of their notes since the date on which the
information in the above table is presented. Information about the selling
securityholders may change from over time. Any changed information will be set
forth in prospectus supplements.
Because the selling securityholders may offer all or some of their notes or
the underlying common stock from time to time, we cannot estimate the amount of
the notes or underlying common stock that will be held by the selling
securityholders upon the termination of any particular offering. See "Plan of
Distribution."
PLAN OF DISTRIBUTION
We will not receive any of the proceeds of the sale of the notes and the
underlying common stock offered by this prospectus. The notes and the underlying
common stock may be sold from time to time to purchasers:
o directly by the selling securityholders;
o through underwriters, broker-dealers or agents who may
receive compensation in the form of discounts, concessions or
commissions from the selling securityholders or the purchasers
of the notes and the underlying common stock.
The selling securityholders and any such broker-dealers or agents who
participate in the distribution of the notes and the underlying common stock may
be deemed to be "underwriters." As a result, any profits on the sale of the
notes and underlying common stock by selling securityholders and any discounts,
commissions or concessions received by any such broker-dealers or agents might
be deemed to be underwriting discounts and commissions under the Securities Act.
If the selling securityholders were to deemed underwriters, the selling
securityholders may be subject to certain statutory liabilities of, including,
but not limited to, Sections 11, 12 and 17 of the Securities Act and Rule 10b-5
under the Exchange Act.
If the notes and underlying common stock are sold through underwriters or
broker-dealers, the selling securityholders will be responsible for underwriting
discounts or commissions or agent's commissions.
The notes and underlying common stock may be sold in one or more
transactions at:
o fixed prices;
o prevailing market prices at the time of sale;
o varying prices determined at the time of sale; or
o negotiated prices.
These sales may be effected in transactions:
o on any national securities exchange or quotation service on
which the notes and underlying common stock may be listed or
quoted at the time of the sale, including the Nasdaq National
Market in the case of the common stock;
o in the over-the-counter market;
o in transactions otherwise than on such exchanges or services or
in the over-the-counter market; or
o through the writing of options.
These transactions may include block transactions or crosses. Crosses are
transactions in which the same broker acts as an agent on both sides of the
trade.
In connection with sales of the notes and underlying common stock or
otherwise, the selling securityholders may enter into hedging transactions with
broker-dealers. These broker-dealers may in turn engage in short sales of the
notes and underlying common stock in the course of hedging their positions. The
selling securityholders may also sell the notes and underlying common stock
short and deliver notes and underlying common stock to close out short
positions, or loan or pledge notes and underlying common stock to broker-dealers
that in turn may sell the notes and underlying common stock.
To our knowledge, there are currently no plans, arrangement or
understandings between any selling securityholders and any underwriter,
broker-dealer or agent regarding the sale of the notes and the underlying common
stock by the selling securityholders. Selling securityholders may not sell any
or all of the notes and the underlying common stock offered by them pursuant to
this prospectus. In addition, we cannot assure you that any such selling
securityholder will not transfer, devise or gift the notes and the underlying
common stock by other means not described in this prospectus.
Our common stock trades on the Nasdaq National Market under the symbol
"RFMD". We do not intend to apply for listing of the notes on any securities
exchange or for quotation through Nasdaq. Accordingly, no assurance can be given
as to the development of liquidity or any trading market for the notes. See
"Risk Factors--A public market may not develop for the notes."
There can be no assurance that any selling securityholder will sell any or
all of the notes or underlying common stock pursuant to this prospectus. In
addition, any notes or underlying common stock covered by this prospectus that
qualify for sale pursuant to Rule 144 or Rule 144A of the Securities Act may be
sold under Rule 144 or Rule 144A rather than pursuant to this prospectus.
The selling securityholders and any other person participating in such
distribution will be subject to the Exchange Act. The Exchange Act rules
include, without limitation, Regulation M, which may limit the timing of
purchases and sales of any of the notes and the underlying common stock by the
selling securityholders and any other such person. In addition, Regulation M of
the Exchange Act may restrict the ability of any person engaged in the
distribution of the notes and the underlying common stock to engage in
market-making activities with respect to the particular notes and the underlying
common stock being distributed for a period of up to five business days prior to
the commencement of such distribution. This may affect the marketability of the
notes and the underlying common stock and the ability of any person or entity to
engage in market-making activities with respect to the notes and the underlying
common stock.
Pursuant to the registration rights agreement filed as an exhibit to this
registration statement, we and the selling securityholders will be indemnified
by the other against certain liabilities, including certain liabilities under
the Securities Act or will be entitled to contribution in connection with these
liabilities.
We have agreed to pay substantially all of the expenses incidental to the
registration, offering and sale of the notes and underlying common stock to the
public other than commissions, fees and discounts of underwriters, brokers,
dealers and agents.
LEGAL MATTERS
The validity of the securities offered hereby will be passed upon for RFMD
by Womble Carlyle Sandridge & Rice, PLLC, Winston-Salem, North Carolina.
EXPERTS
The consolidated financial statements of RF Micro Devices, Inc. appearing in
RF Micro Devices, Inc.'s Annual Report (Form 10-K) for the year ended March 31,
2000, have been audited by Ernst & Young LLP, independent auditors, as set forth
in their report thereon included therein and incorporated herein by reference.
Such consolidated financial statements are incorporated herein by reference in
reliance upon such report given on the authority of such firm as experts in
accounting and auditing.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the costs and expenses, other than
underwriting discounts and commissions, payable by the Company in connection
with the sale of the notes and underlying Common Stock being registered hereby.
All amounts are estimates except the SEC registration fee.
<TABLE>
<S> <C>
SEC registration fee....................................... $ 57,519
Legal fees and expenses.................................... $ 40,000
Accounting fees and expenses............................... $ 6,000
Trustee fees and expenses.................................. $ 3,000
Miscellaneous expenses..................................... $ 3,481
--------
Total $110,000
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Sections 55-8-50 through 55-8-58 of the North Carolina Business
Corporation Act contain specific provisions relating to indemnification of
directors and officers of North Carolina corporations. In general, such sections
provide that (i) a corporation must indemnify a director or officer who is
wholly successful in his or her defense of a proceeding to which such person is
a party because of his or her status as such, unless limited by the articles of
incorporation, and (ii) a corporation may indemnify a director or officers if he
or she is not wholly successful in such defense, if it is determined as provided
by statute that the director or officer meets a certain standard of conduct,
provided that when a director or officer is liable to the corporation or is
adjudged liable on the basis that personal benefit was improperly received by
him or her, the corporation may not indemnify him or her. A director or officer
of a corporation who is a party to a proceeding may also apply to the courts for
indemnification, and the court may order indemnification under certain
circumstances set forth in the statute. A corporation may, in its articles of
incorporation or bylaws or by contract or resolution, provide indemnification in
addition to that provided by statute, subject to certain conditions.
The Registrant's bylaws provide for the indemnification of any director
or officer of the Registrant against liabilities and litigation expenses arising
out of his or her status as such, excluding (i) any liabilities or litigation
expenses relating to activities which were at the time taken known or believed
by such person to be clearly in conflict with the best interest of the
Registrant and (ii) that portion of any liabilities or litigation expenses with
respect to which such person is entitled to receive payment under any insurance
policy.
The Registrant's articles of incorporation provide for the elimination
of the personal liability of each director of the Registrant to the fullest
extent permitted by law.
The Registrant maintains directors' and officers' liability insurance
under which any controlling person, director or officer of the Registrant is
insured or indemnified against certain liabilities which he or she may incur in
his or her capacity as such.
ITEM 16. EXHIBITS AND FINANCIAL SCHEDULES
(a) Exhibits:
<TABLE>
<CAPTION>
Number
<S> <C>
3.1 Amended and Restated Articles of Incorporation, as amended (1)
3.2 Bylaws (2)
4.1 Form of Note
4.2 Indenture
4.3 Registration Rights Agreement
5.1 Opinion of Womble Carlyle Sandridge & Rice, PLLC
12.1 Computation of Ratios of Earnings to Fixed Charges
23.1 Consent of Independent Auditors
23.2 Consent of Womble Carlyle Sandridge & Rice, PLLC (included in
Exhibit 5.1)
24.1 Power of Attorney
25.1 Form T-1 Statement of Eligibility of Trustee for Indenture under the
Trust Indenture Act of 1939
</TABLE>
--------------
[FN]
(1) Incorporated by reference to Exhibit 3.1 filed with the Registrant's
Quarterly Report on Form 10-Q for the quarterly period ended June 26, 1999 and
to Exhibit 3.1 filed with the Registrant's Quarterly Report on Form 10-Q for the
fiscal quarter ended July 1, 2000.
(2) Incorporated by reference to Exhibit 3.2 filed with the Registrant's
Registration Statement on Form S-1 (File No. 333-22625)
</FN>
(b) Financial Statement Schedules
Schedule II -- Valuation and Qualifying Accounts, Years Ended March 31, 1998,
1999 and 2000.
Schedules not listed above have been omitted because the information
required to be set forth therein is not applicable or is shown in the financial
statements or notes thereto.
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(a) To include any prospectus required by Section 10(a)(3) of the
Securities Act,
(b) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set
forth in the Registration Statement. Notwithstanding the
foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low
or high end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than a 20 percent change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement,
(c) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement;
provided, however, that clauses (a) and (b) do not apply if the
information required to be included in a post-effective amendment by
such clauses is contained in periodic reports filed with or furnished
to the Securities and Exchange Commission by the Registrant pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 (the
"Exchange Act") that are incorporated by reference in the Registration
Statement.
(2) That, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed a new
registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the
termination of the offering.
(4) That, for purposes of determining any liability under the Securities
Act, each filing of the Registrant's annual report pursuant to Section
13(a) or Section 15(d) of the Exchange Act that is incorporated by
reference in this Registration Statement shall be deemed to be a new
registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to directors, officers and controlling persons of the Registrant
pursuant to the provisions described under Item 15 above, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities, other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding, is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained
in a form of prospectus filed by the registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to
be part of this registration statement as of the time it was declared
effective.
(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Greensboro, State of North Carolina, on November 6,
2000.
RF MICRO DEVICES, INC.
By: /s/ William A. Priddy, Jr.
----------------------------------
William A. Priddy, Jr.
Vice President and Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on November 6,
2000 in the capacities indicated.
/s/ David A. Norbury* /s/William A. Priddy, Jr.
----------------------------------- -----------------------------
David A. Norbury William A. Priddy, Jr.
President, Chief Executive Officer and Director Vice President and Chief
(principal executive officer) Financial Officer
(principal financial officer)
/s/ Barry D. Church* /s/ Erik H. van der Kaay*
------------------------------------- ------------------------------
Barry D. Church Erik H. van der Kaay
Controller (principal accounting officer) Director
/s/ Albert E. Paladino* /s/ William J. Pratt*
-------------------------------------- ------------------------------
Albert E. Paladino William J. Pratt
Director Director
/s/ Walter H. Wilkinson, Jr.*
-----------------------------
Walter H. Wilkinson, Jr.
Director
* By: /s/ William A. Priddy, Jr.
----------------------------
William A. Priddy, Jr.
Attorney-in-Fact
