RF Micro Devices Inc. (RFMD, Financial) filed Quarterly Report for the period ended 2010-01-02.
Rf Micro Devices Inc. has a market cap of $1.09 billion; its shares were traded at around $4.06 with a P/E ratio of 31.2 and P/S ratio of 1.2. RFMD is in the portfolios of Bruce Kovner of Caxton Associates, Arnold Van Den Berg of Century Management.
During the first quarter of fiscal 2008, the $51.4 million valuation allowance against the domestic federal and state deferred tax assets that existed as of the end of fiscal 2007 was reduced by $43.6 million. Of this amount, $12.9 million was reversed in connection with changes in accounting for uncertain income tax positions. The balance of $30.7 million consisted of a reversal of $31.6 million of the valuation allowance based on the evaluation by management of the ability in future years to realize the related domestic deferred tax assets and an increase of $0.9 million recorded in connection with state credit deferred tax assets acquired in connection with the acquisition of Sirenza Microdevices, Inc. (Sirenza). The $31.6 million reversal was based on the determination by management that as of the end of the first quarter of fiscal 2008, the negative evidence that existed as of the end of fiscal 2007 was no longer applicable. Based on actual activity during the period, by the end of the first quarter of fiscal 2008 we were able to better determine the impact of the slow-down in customer demand from the high per-unit dollar content major customer and positive evidence arose of actual increases in sales to other customers and the commencement of volume production of the POLARIS® 3 RF solution. The amount reversed consisted of $20.7 million recognized as an income tax benefit, $4.8 million reversed against equity related to the tax benefit of employee stock options, and $6.1 million reversed against goodwill related to the tax benefit of net operating losses, credits and deductions acquired from other companies.
As of the end of fiscal 2009, the valuation allowance against deferred tax assets had increased by $99.6 million to $138.4 million, as compared to $38.8 million as of the end of fiscal 2008. This increase was comprised of: a $0.2 million increase related to state tax credits and net operating loss carryovers acquired in the Sirenza transaction which were not realizable as of the acquisition date and which increase was recorded in goodwill; increases of $90.8 million related to U.S. deferred tax assets, $1.8 million related to China deferred tax assets, and $14.1 million related to U.K. deferred tax assets for which there was a change in judgment about the realizability of the deferred tax assets during fiscal 2009 and which increases were recorded as an income tax expense during the fiscal year; a $0.3 million increase related to the tax benefit of employee stock compensation which was recorded in equity during the fiscal year; and a $7.6 million decrease related to the impact from the change in the exchange rate for the British pound on the valuation allowance for U.K. deferred tax assets existing as of the beginning of the fiscal year, which amount was offset by a corresponding decrease in the U.S. dollar-denominated amount of the related U.K. deferred tax assets.
LIQUIDITY AND CAPITAL RESOURCES We have funded our operations to date through sales of equity and debt securities, bank borrowings, capital equipment leases and revenue from product sales. Through public and Rule 144A securities offerings, we have raised approximately $1,053.3 million, net of offering expenses. As of January 2, 2010, we had working capital of approximately $352.0 million, including $121.5 million in cash and cash equivalents, compared to working capital at December 27, 2008, of approximately $405.7 million, including $145.4 million in cash and cash equivalents.
Net cash provided by investing activities for the nine months ended January 2, 2010, was $27.5 million compared to net cash used in investing activities of $42.8 million for the nine months ended December 27, 2008. This increase was in part due to the proceeds from the maturities of investments in available-for-sale securities. In addition, during the first nine months of fiscal 2010, capital expenditures totaled approximately $5.9 million, which represents a decrease in capital spending of 86% as compared to $42.2 million of capital expenditures for the first nine months of fiscal 2009. Also during the first quarter of fiscal 2009, we completed the acquisition of UMC for $23.5 million, net of cash acquired.
Net cash used in financing activities was $207.3 million for the nine months ended January 2, 2010, compared to net cash used in financing activities of $22.7 million for the nine months ended December 27, 2008. This increase in cash used in financing activities was primarily due to the cash purchase of $197.0 million original principal amount of the 2010 Notes in the third quarter of fiscal 2010, as well as the cash purchases during the first quarter of fiscal 2010 of (i) an aggregate of $2.2 million original principal amount of the 2012 Notes for $1.8 million, and (ii) an aggregate of $7.8 million original principal amount of the 2014 Notes for $4.8 million.
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Rf Micro Devices Inc. has a market cap of $1.09 billion; its shares were traded at around $4.06 with a P/E ratio of 31.2 and P/S ratio of 1.2. RFMD is in the portfolios of Bruce Kovner of Caxton Associates, Arnold Van Den Berg of Century Management.
Highlight of Business Operations:
In the first quarter of fiscal 2009, we began execution of a strategic restructuring to reduce investments in wireless systems, including cellular transceivers and GPS solutions, in order to focus on our core RF component opportunities. Additionally, we have consolidated our production test facilities in order to reduce cycle time, better serve our customer base and improve our overall profitability. We have recorded restructuring charges of approximately $0.2 million and $1.0 million for the three and nine months ended January 2, 2010, and $4.7 million and $48.4 million of expenses for the three and nine months ended December 27, 2008, respectively, related to one-time employee termination expenses, impaired assets (including property and equipment) and lease and other contract termination costs. From the first quarter of fiscal 2009 through the third quarter of 2010, we incurred a total of $48.1 million in restructuring charges related to this plan. As of January 2, 2010, we expect to record approximately $1.3 million of additional restructuring charges associated with ongoing expenses related to exited leased facilities and one-time employee termination expenses, for a total expected cost of approximately $49.4 million. As of January 2, 2010, the restructuring to reduce or eliminate our investments in wireless systems is substantially completed (see Note 9 to the Condensed Consolidated Financial Statements).During the first quarter of fiscal 2008, the $51.4 million valuation allowance against the domestic federal and state deferred tax assets that existed as of the end of fiscal 2007 was reduced by $43.6 million. Of this amount, $12.9 million was reversed in connection with changes in accounting for uncertain income tax positions. The balance of $30.7 million consisted of a reversal of $31.6 million of the valuation allowance based on the evaluation by management of the ability in future years to realize the related domestic deferred tax assets and an increase of $0.9 million recorded in connection with state credit deferred tax assets acquired in connection with the acquisition of Sirenza Microdevices, Inc. (Sirenza). The $31.6 million reversal was based on the determination by management that as of the end of the first quarter of fiscal 2008, the negative evidence that existed as of the end of fiscal 2007 was no longer applicable. Based on actual activity during the period, by the end of the first quarter of fiscal 2008 we were able to better determine the impact of the slow-down in customer demand from the high per-unit dollar content major customer and positive evidence arose of actual increases in sales to other customers and the commencement of volume production of the POLARIS® 3 RF solution. The amount reversed consisted of $20.7 million recognized as an income tax benefit, $4.8 million reversed against equity related to the tax benefit of employee stock options, and $6.1 million reversed against goodwill related to the tax benefit of net operating losses, credits and deductions acquired from other companies.
As of the end of fiscal 2009, the valuation allowance against deferred tax assets had increased by $99.6 million to $138.4 million, as compared to $38.8 million as of the end of fiscal 2008. This increase was comprised of: a $0.2 million increase related to state tax credits and net operating loss carryovers acquired in the Sirenza transaction which were not realizable as of the acquisition date and which increase was recorded in goodwill; increases of $90.8 million related to U.S. deferred tax assets, $1.8 million related to China deferred tax assets, and $14.1 million related to U.K. deferred tax assets for which there was a change in judgment about the realizability of the deferred tax assets during fiscal 2009 and which increases were recorded as an income tax expense during the fiscal year; a $0.3 million increase related to the tax benefit of employee stock compensation which was recorded in equity during the fiscal year; and a $7.6 million decrease related to the impact from the change in the exchange rate for the British pound on the valuation allowance for U.K. deferred tax assets existing as of the beginning of the fiscal year, which amount was offset by a corresponding decrease in the U.S. dollar-denominated amount of the related U.K. deferred tax assets.
LIQUIDITY AND CAPITAL RESOURCES We have funded our operations to date through sales of equity and debt securities, bank borrowings, capital equipment leases and revenue from product sales. Through public and Rule 144A securities offerings, we have raised approximately $1,053.3 million, net of offering expenses. As of January 2, 2010, we had working capital of approximately $352.0 million, including $121.5 million in cash and cash equivalents, compared to working capital at December 27, 2008, of approximately $405.7 million, including $145.4 million in cash and cash equivalents.
Net cash provided by investing activities for the nine months ended January 2, 2010, was $27.5 million compared to net cash used in investing activities of $42.8 million for the nine months ended December 27, 2008. This increase was in part due to the proceeds from the maturities of investments in available-for-sale securities. In addition, during the first nine months of fiscal 2010, capital expenditures totaled approximately $5.9 million, which represents a decrease in capital spending of 86% as compared to $42.2 million of capital expenditures for the first nine months of fiscal 2009. Also during the first quarter of fiscal 2009, we completed the acquisition of UMC for $23.5 million, net of cash acquired.
Net cash used in financing activities was $207.3 million for the nine months ended January 2, 2010, compared to net cash used in financing activities of $22.7 million for the nine months ended December 27, 2008. This increase in cash used in financing activities was primarily due to the cash purchase of $197.0 million original principal amount of the 2010 Notes in the third quarter of fiscal 2010, as well as the cash purchases during the first quarter of fiscal 2010 of (i) an aggregate of $2.2 million original principal amount of the 2012 Notes for $1.8 million, and (ii) an aggregate of $7.8 million original principal amount of the 2014 Notes for $4.8 million.
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