Qorvo : trade; Reports Fiscal 2016 First Quarter Results

July 29, 2015

GREENSBORO, N.C., and HILLSBORO, Ore., July 29, 2015 (GLOBE NEWSWIRE) --

● GAAP quarterly revenue grew 6% sequentially to $673.6 million

● On a GAAP basis, gross margin was 41.5%, operating loss was ($1.3) million, and EPS was $0.01

● Non-GAAP gross margin expanded to 51.5%, reflecting favorable product mix and synergies

● Non-GAAP operating income increased by 11% sequentially to $187.8 million, or 27.9% of revenue

● Non-GAAP EPS was $1.09

● Qorvo repurchased approximately 602,000 shares of common stock at an average price of $83.10

● Increased GaN revenue 30% year-over-year, led by strength in CATV and defense and aerospace, where Qorvo is the

GaN market leader

● Accelerated engagements with leading mobile operators to improve spectral efficiency and maximize their returns on spectrum investments

● Increased design traction with BAW-based RF Fusion™ in flagship smartphones and with leading LTE reference desig

● Expanded collaboration with a leading LTE baseband supplier to demonstrate uplink carrier aggregation for China market

● Commenced shipments of RF Flex™ to leadinCghina-based smartphone manufacturers

● Received first production orders for high-performance LNAs from leading smartphone manufacturer

● Selected by North American manufacturer of communication equipment to supply GaN PA in first-responder all-band handheld radio, replacing LDMOS PAs

● Achieved Wi-Fi CPE 5GHz PA reference design win demonstrating industry-leading performance

● Received production orders for BAW-based RF Fusion™ Mobile W-Fii iFEM for flagship Android smartphone

● Secured multiple design wins for diverse wearable applications

Qorvo™ (Nasdaq:QRVO), a leading provider of core technologies and RF solutions for mobile, infrastructure and aerospace/defense applications, today announced financial results for its fiscal 2016 first quarter, ended June 27, 2015.
On a GAAP basis, June quarterly revenue was $673.6 million and gross margin was 41.5%, operating loss was ($1.3) million, and net income was $2.0 million, or $0.01 per diluted share based on 154.5 million shares outstanding.
On a non-GAAP basis, June quarterly revenue was $672.7 million and gross margin was 51.5%. Synergies realized in G&A
were balanced by higher investments in R&D, yielding operating income of $187.8 million, or 27.9% of sales. Net income was
$168.5 million, or $1.09 per diluted share based on 154.5 million shares outstanding.

Qorvo currently believes the demand environment in its end markets supports the following non-GAAP expectations for the quarter ending October 3rd:

● Quarterly revenue of approximately $690 to $710 million, up 4% sequentially at the midpoint

● Gross margin of approximately 50% to 51%

● A tax rate of 10% to 15%

● Diluted EPS of $1.05 to $1.15 based on approximately 155 million shares

Qorvo's actual quarterly results may differ from these expectations and projections, and such differences may be material.

Bob Bruggeworth, president and chief executive officer of Qorvo, said, "Revenue in the June quarter increased 6% sequentially
and 23% year-over-year, when compared to the combined revenue of RFMD and TriQuint in the June 2014 quarter. Quarterly revenue was led by strong performance in Mobile Products, which posted robust 12% growth versus the prior quarter and offset the sharp sequential decline in wireless infrastructure. Quarterly gross margin expanded by 110 basis points to 51.5%, reflecting favorable product mix and the realization of cost synergies.
"We are launching an increasing number of differentiated RF solutions that leverage our unique combination of core competencies. These new Qorvo solutions, which include receive diversity modules, Wi-Fi Integrated Front End Modules, and SOI infrastructure switches, are expected to contribute meaningfully to revenue next calendar year. The Qorvo team is making outstanding progress, and we're on track to achieve our financial model."
The following tables set forth selected GAAP and non-GAAP financial information for Qorvo, RFMD, and TriQuint for their respective June 2015, March 2015, and June 2014 quarters. See the more detailed financial information foQr orvo, including reconciliation of GAAP and non-GAAP financial information, attached.

(In millions, except for percentages and EPS)

Revenue $ 67 $ 63 $ 3

Gross profit $ 27 $ 18 $ 9

Gross margin 41.5% 29.8% 11.7 ppt

Operating expenses $ 28 $ 29 $ (10

Operating loss $ (1 $ (102 $ 10

Net income $ $ $ (4

Weighted average diluted shares 154.5 150.5 4.0

Diluted EPS $ 0 $ 0 $ (0.

(In millions, except for percentages and EPS)

Revenue $ 67 $ 63 $ 3

Gross profit $ 34 $ 31 $ 2

Gross margin 51.5% 50.4% 1.1 ppt Operating expenses $ 15 $ 15 $ Operating income $ 18 $ 16 $ 1

Net income $ 16 $ 16 $ Weighted average diluted shares 154.5 150.5 4.0

Diluted EPS $ 1 $ 1 $ (0.

(In millions, except for percentages and EPS)

Revenue $ 67 $ 31 $ 23

(In millions, except for percentages and EPS)

1Excludes share-based compensation, amortization of intangibles, acquired inventory step-up and revaluation, acquisition and integration- related costs, certain consulting costs, intellectual property rights (IPR) litigation costs, non-cash deferred royalty revenue and equal and offsetting non-cash prepaid royalty amortization, start-up costs, restructuring and disposal costs, (gain) loss on assets, gain on investment, and an adjustment of income taxes for cash basis.

2Reflects the conversion rates applicable to RFMD and TriQuint shares in their business combination that resulted in the creation of the

Company.

In addition to disclosing financial results calculated in accordance with United States (U.S.) generally accepted accounting principles (GAAP), Qorvo's earnings release contains some or all of the following non-GAAP financial measures: (i) non-GAAP gross profit and gross margin, (ii) non-GAAP operating income and operating margin, (iii) non-GAAP net income, (iv) non- GAAP net income per diluted share, (v) non-GAAP operating expenses (research and development, marketing and selling and general and administrative), (vi) free cash flow, (vii), EBITDA, (viii) return on invested capital (ROIC), and (ix) net debt or positive net cash. Each of these no-nGAAP financial measures is either adjusted from GAAP results to exclude certain expenses or derived from multiple GAAP measures, which are outlined in the "Reconciliation of GAAP to Non-GAAP Financial
Measures" tables, attached, and the "Additional Selected Non-GAAP Financial Measures And Reconciliations" tables, attached.
In managing Qorvo's business on a consolidated basis, management develops an annual operating plan, which is approved by our Board of Directors, using non-GAAP financial measures. In developing and monitoring performance against this plan, management considers the actual or potential impacts on these non-GAAP financial measures from actions taken to reduce
unit costs with the goal of increasing gross margin and operating margin. In addition, management relies upon these no-nGAAP
financial measures to assess whether research and development efforts are at an appropriate level, and when making decisions about product spending, administrative budgets, and marketing programs. In addition, we believe that non-GAAP financial measures provide useful supplemental information to investors and enable investors to analyze the results of operations in the same way as management. We have chosen to provide this supplemental information to enable investors to perform additional comparisons of operating results, to assess our liquidity and capital position and to analyze financial performance excluding the effect of expenses unrelated to operations, certain non-cash expenses and share-based
compensation expense, which may obscure trends in Qorvo's underlying performance.
We believe that these non-GAAP financial measures offer an additional view of Qorvo's operations that, when coupled with the GAAP results and the reconciliations to corresponding GAAP financial measures, provide a more complete understanding of Qorvo's results of operations and the factors and trends affecting Qorvo's business. However, these no-nGAAP financial measures should be considered as a supplement to, and not as a substitute for, or superior to, the corresponding measures calculated in accordance with GAAP.
Our rationale for using these non-GAAP financial measures, as well as their impact on the presentation of Qorvo's operations, are outlined below:
Non-GAAP revenue. No-nGAAP revenue excludes non-cash deferred royalty revenue. We believe that the exclusion of this non-cash adjustment to revenue provides management and investors a more effective means of evaluating our historical and projected performance.
Non-GAAP gross profit and gross margin. N-oGnAAP gross profit and gross margin exclude share-based compensation expense, amortization of intangible assets, acquired inventory step-up and revaluation, non-cash deferred royalty revenue, non-cash prepaid royalty amortization, adjustments for restructuring and disposal costs and certain consulting costs. We
believe that exclusion of these costs in presenting non-GAAP gross profit and gross margin gives management and investors a more effective means of evaluating Qorvo's historical performance and projected costs and the potential for realizing cost efficiencies. We believe that the majority oQf orvo's purchased intangibles are not relevant to analyzing current operations because they generally represent costs incurred by the acquired company to build value prior to acquisition, and thus are effectively part of transaction costs rather than ongoing costs of operating Qorvo's business. In this regard, we note that (i) once the intangibles are fully amortized, the intangibles will not be replaced with cash costs and therefore, the exclusion of these costs provides management and investors with better visibility into the actual costs required to generate revenues over time, and (ii) although we set the amortization expense based on useful life of the various assets at the time of the transaction, we cannot influence the timing and amount of the future amortization expense recognition once the lives are
established. Similarly, we believe that presentation of no-nGAAP gross profit and gross margin and other non-GAAP financial measures that exclude the impact of share-based compensation expense assists management and investors in evaluating the period-over-period performance of Qorvo's ongoing operations because (i) the expenses are non-cash in nature, and (ii) although the size of the grants is within our control, the amount of expense varies depending on factors such as short-term fluctuations in stock price volatility and prevailing interest rates, which can be unrelated to the operational performance of Qorvo during the period in which the expense is incurred and generally is outside the control of management. Moreover, we believe that the exclusion of share-based compensation expense in presenting non-GAAP gross profit and gross margin and other non-GAAP financial measures is useful to investors to understand the impact of the expensing of share-based compensation to Qorvo's gross profit and gross margins and other financial measures in comparison to both prior periods as well as to its competitors. We also believe that the adjustments to profit and margin related to no-ncash deferred royalty
revenue, non-cash prepaid royalty amortization, restructuring and disposal costs and certain consulting costs, do not constitute part of Qorvo's ongoing operations and therefore the exclusion of these items provides management and investors with better visibility into the actual revenue and actual costs required to generate revenues over time and gives management and
investors a more effective means of evaluating our historical and projected performance. We believe disclosure of no-nGAAP gross profit and gross margin has economic substance because the excluded expenses do not represent continuing cash expenditures and, as described above, we have little control over the timing and amount of the expenses in question.
Non-GAAP operating income and operating margin. No-nGAAP operating income and operating margin exclude share-based compensation expense, amortization of intangible assets, acquired inventory step-up and revaluation, restructuring and disposal costs, acquisition and integration related costs, certain consulting costs, intellectual property rights (IPR) litigation costs, loss (gain) on assets and start-up costs. We believe that presentation of a measure of operating income and operating margin that excludes amortization of intangible assets and share-based compensation expense is useful to both management and investors for the same reasons as described above with respect to our use of non-GAAP gross profit and gross
margin. We believe that restructuring and disposal costs, acquisition and integration related costs, acquired inventory ste-pup and revaluation, certain consulting costs, IPR litigation costs, loss (gain) on assets and start-up costs do not constitute part of Qorvo's ongoing operations and therefore, the exclusion of these costs provides management and investors with better visibility into the actual costs required to generate revenues over time and gives management and investors a more effective means of evaluating our historical and projected performance. We believe disclosure of no-nGAAP operating income and operating margin has economic substance because the excluded expenses are either unrelated to operations or do not represent current cash expenditures.
Non-GAAP net income and non-GAAP net income per diluted share. Non-GAAP net income and non-GAAP net income per diluted share exclude the effects of share-based compensation expense, amortization of intangible assets, restructuring and disposal costs, acquisition and integration related costs, acquired inventory step-up and revaluation, certain consulting costs, IPR litigation costs, loss (gain) on assets, start-up costs, gain on investment and also reflect an adjustment of income taxes for cash basis. We believe that presentation of measures of net income and net income per diluted share that exclude these item is useful to both management and investors for the reasons described above with respect to non-GAAP gross profit and gross
margin and non-GAAP operating income and operating margin. We believe disclosure of no-nGAAP net income and non-GAAP net income per diluted share has economic substance because the excluded expenses are either unrelated to operations or do not represent current cash expenditures.
Non-GAAP research and development, marketing and selling and general and administrative expenses. Non-GAAP research and development, marketing and selling and general and administrative expenses exclude share-based compensation expense, amortization of intangible assets, certain consulting costs and IPR litigation costs. We believe that presentation of measures of these operating expenses that exclude amortization of intangible assets and share-based compensation expense is useful to both management and investors for the same reasons as described above with respect to our use of non-GAAP gross profit and gross margin. We believe that certain consulting costs and IPR litigation costs do not constitute part oQf orvo's
ongoing operations and therefore, the exclusion of these costs provides management and investors with better visibility into the actual costs required to generate revenues over time and gives management and investors a more effective means of evaluating our historical and projected performance. We believe disclosure of these no-nGAAP operating expenses has economic substance because the excluded expenses are either unrelated to operations or do not represent current cash expenditures.
Free cash flow. Qorvo defines free cash flow as net cash provided by operating activities during the period minus property and equipment expenditures made during the period. We use free cash flow as a supplemental financial measure in our evaluation of liquidity and financial strength. Management believes that this measure is useful as an indicator of our ability to service our debt, meet other payment obligations and make strategic investments. Free cash flow should be considered in addition to, rather than as a substitute for, net income as a measure of our performance and net cash provided by operating activities as a measure of our liquidity. Additionally, our definition of free cash flow is limited, in that it does not represent residual cash flows available for discretionary expenditures due to the fact that the measure does not deduct the payments required for debt
service and other contractual obligations. Therefore, we believe it is important to view free cash flow as a measure that provides supplemental information to our entire statement of cash flows.
EBITDA. Qorvo defines EBITDA as earnings before interest expense and interest income, income tax expense (benefit), depreciation and intangible amortization. Management believes that this measure is useful to evaluate our ongoing operations and as a general indicator of our operating cash flow (in conjunction with a cash flow statement which also includes among
other items, changes in working capital and the effect of non-cash charges).
Non-GAAP ROIC. Return on invested capital (ROIC) is a non-GAAP financial measure that management believes provides useful supplemental information for management and the investor by measuring the effectiveness of our operations' use of invested capital to generate profits. We use ROIC to track how much value we are creating for our shareholders. No-nGAAP ROIC is calculated by dividing annualized non-GAAP operating income, net of cash taxes, by average invested capital. Averag invested capital is calculated by subtracting the average of the beginning balance and the ending balance of current liabilities (excluding the current portion of long-term debt and other short-term financings) from the average of the beginning balance
and the ending balance of net accounts receivable, inventories, other current assets, net property and equipment and a cash amount equal to seven days of quarterly revenue.
Net debt or positive net cash. Net debt or positive net cash is defined as unrestricted cash, cash equivalents and short-term investments minus any borrowings under our credit facility. Management believes that net debt or positive net cash provides useful information regarding the level of Qorvo's indebtedness by reflecting cash and investments that could be used to repay debt.
With respect to the TriQuint financial results included herein, this earnings release provides financial measures for non-GAAP net income (loss), diluted earnings (loss) per share, gross profit, gross margin, operating expenses and operating income (loss) that exclude equity compensation expense, non-cash tax expense (benefit), certain entries associated with mergers and acquisitions including expenses associated with the merger with RFMD and other specifically identified non-routine items, and are therefore not calculated in accordance with GAAP. The charges associated with mergers and acquisitions reflect the amortization of intangible and tangible assets, transaction costs and changes to the earnout liability estimates recorded in connection with acquisition accounting and charged to the income statement. The charges associated with the merger with RFMD include professional fees and other costs. The non-cash tax expense (benefit) excludes certain deferred tax charges and benefits that do not currently result in a tax payment or tax refund. Each of these non-GAAP financial measures and the adjustments from GAAP results are outlined in the "Supplemental Reconciliation of GAAP to Non-GAAP Results" table, attached.
Limitations of non-GAAP financial measures. The primary material limitations associated with the use of non-GAAP gross profit and gross margin, non-GAAP operating expenses, non-GAAP operating income and operating margin, non-GAAP net income, non-GAAP net income per diluted share, non-GAAP diluted earnings per share, free cash flow, EBITDA, non-GAAP ROIC and net debt or positive net cash, as an analytical tool compared to the most directly comparable GAAP financial measures of gross profit and gross margin, operating expenses, operating income, net income, net income per diluted share, diluted earnings per share and net cash provided by operating activities are (i) they may not be comparable to similarly titled measures used by other companies in our industry, and (ii) they exclude financial information that some may consider important in evaluating our
performance, thus limiting their usefulness as a comparative tool. We compensate for these limitations by providing full disclosure of the differences between these non-GAAP financial measures and the corresponding GAAP financial measures, including a reconciliation of the non-GAAP financial measures to the corresponding GAAP financial measures, to enable investors to perform their own analysis of our gross profit and gross margin, operating expenses, operating income, net income, net income per diluted share and net cash provided by operating activities. We further compensate for the limitations of our use of non-GAAP financial measures by presenting the corresponding GAAP measures more prominently.
Qorvo will conduct a conference call at 5:00 p.m. EST today to discuss today's press release. The conference call will be broadcast live over the Internet and can be accessed by any interested party at http://www.qorvo.com(under "Investors"). A telephone playback of the conference call will be available approximately two hours after the call's completion and can be accessed by dialing 719-457-0820 and using the passcode 6853811. The playback will be available through the close of business August 5, 2015.

Qorvo (Nasdaq:QRVO) is a leading provider of core technologies and RF solutions for mobile, infrastructure and aerospace/defense applications. Qorvo was formed following the merger of RFMD and TriQuint, and has more than 6,000 global employees dedicated to delivering solutions for everything that connects the world. Qorvo has the industry's broadest portfolio of products and core technologies; world-class ISO9001-, ISO 14001- and ISO/TS 16949-certified manufacturing facilities; and is a DoD-accredited 'Trusted Source' (Category 1A) for GaAs, GaN and BAW products and services. For the industry's leading core RF solutions, visit www.qorvo.com.
This press release includes "forward-looking statements" within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, statements about our plans, objectives, representations and contentions, and are not historical facts and typically are identified by use of terms such as "may," "will," "should," "could," "expect," "plan," "anticipate," "believe," "estimate," "predict," "potential," "continue" and similar words, although some forward-looking statements are expressed differently. You should be aware that the forward-looking statements included herein represent management's current judgment and expectations, but our actual results, events and performance could differ materially from those expressed or implied by forward-looking statements. We do not intend to update any of these forward-looking statements or publicly announce the results of any revisions to these forward-looking statements, other than as is required under the federal securities laws. Qorvo's business is subject to numerous risks and uncertainties, including variability in operating results, the inability of certain of our customers or suppliers to access their traditional sources of credit, our industry's rapidly changing technology, our dependence on a few large customers for a substantial portion of our revenue, our ability to implement innovative technologies, our ability to bring new products to market and achieve design wins, the efficient and successful operation of our wafer fabrication facilities, assembly facilities and test and tape and reel facilities, our ability to adjust production capacity in a timely fashion in response to changes in demand for our products, variability in manufacturing yields, industry overcapacity and current macroeconomic conditions, inaccurate product forecasts and corresponding inventory and manufacturing costs, dependence on third parties and our ability to manage channel partners
and customer relationships, lawsuits and claims relating to our products, security breaches and other similar disruptions compromising our information and exposing us to liability, and our ability to integrate the businesses of RFMD and TriQuint. These and other risks and uncertainties, which are described in more detail in Qorvo's filings with the Securities and Exchange Commission, could cause actual results and developments to be materially different from those expressed or implied by any of these forward-looking statements.
Financial Tables to Follow
QRVO-F

(Unaudited)

Revenue $ 673, $ 316,

Costs and expenses:

Cost of goods sold 394,124 174,052

(Loss) income from operations (1,335) 46,120

Other income (expense), net 3,963 (55)

Income before income taxes $ 2, $ 46, Income tax expense (592) (7,418)

Net income $ 2, $ 38,

Net income per share, diluted $ 0 $ 0

Weighted average outstanding diluted shares 154,461 73,659 (1) The following financial statements foQr orvo, Inc. and Subsidiaries, including the reconciliation of GAAP and non-GAAP financial information,

reflect the financial position and results of operation of Qorvo, Inc. and Subsidiaries for the three months ended June 27, 2015 and for the three months ended March 28, 2015. The condensed consolidated statement of income for the three months endedJune 28, 2014 only includes the results of operations of RF Micro Devices, Inc. and Subsidiaries for this period.

(Unaudited)

G

Other expenses (including loss (gain) on assets, start-up costs and certain consulting costs) 5,788 1,140 845

Non-GAAP operating income $ 187, $ 169, $ 78, G

Adjustment of income taxes for cash basis (18,708) (112,232) (321)

Non-GAAP net income $ 168, $ 167, $ 71, GAAP weighted average outstanding diluted shares 154,461 150,470 73,659

Diluted shar-ebased awards - - - Non-GAAP weighted average outstanding diluted shares 154,461 150,470 73,659

Non-GAAP net income per share, diluted $ 1 $ 1 $ 0

(Unaudited)

GAAP gross profit/margin $ 279, 41.5% $ 188, 29.8% $ 142, 45.0% Adjustment for intangible amortization 51,265 7.6% 51,578 8.1% 5,779 1.8% Acquired inventory step-up and revaluation - -% 72,850 11.5% - -% Adjustment for share-based compensation 15,272 2.3% 1,526 0.2% 928 0.3% Restructuring and disposal costs - -% 4,080 0.6% 4 -% Other expenses 415 -% 875 0.1% - -% Non-cash deferred royalty revenue and equal and offsetting non-cash prepaid

royalty amortization ($970) - 0.1% - 0.1% - -% Non-GAAP gross profit/margin $ 346,51.5% $ 319,50.4% $ 148,47.1%

(as a percentage of sales)

GAAP operating loss (0.2)% Share-based compensation expense 7.1% Amortization of intangible assets 18.3% Restructuring and disposal costs 0.2% IPR litigation costs -% Acquisition and integration related costs 1.6% Other expenses (including loss (gain) on assets and start-up costs) 0.9% Non-GAAP operating income 27.9%

Free Cash Flow (1)June 27, 2015

(In millions)

Net cash provided by operating activities $ 14

Purchases of property and equipment (89.4) Free cash flow $ 5

(1) Free Cash Flow is calculated as net cash provided by operating activities minus property and equipment expenditures.

(In thousands) (Unaudited)

Other non-cash expenses 476 - - Non-GAAP research and development expense $ 104, $ 98, $ 42,

Other non-cash expenses 280 - - Non-GAAP marketing and selling expense $ 32, $ 29, $ 16,

IPR litigation costs 148 68 3,014

Non-GAAP general and administrative expense $ 21, $ 21, $ 10,

(Unaudited)

Current assets:

Cash and cash equivalents $ 325, $ 299,

T

Current liabilities:

T

Deferred tax liabilities 309,694 310,189

Other long-term liabilities 86,489 83,720

Total liabilities 731,679 719,219

Stockholders' equity 6,178,191 6,173,160

Total liabilities and stockholders' equity $ 6,909, $ 6,892,

(Unaudited)

GAAP gross margin 40.2% Adjustment for stock based compensation charges 1.0% Adjustment for restructuring and impairment charges -% Adjustment for charges associated with acquisitions 0.5% Non-GAAP gross margin 41.7%

GAAP and Non-GAAP weighted average outstanding diluted shares 75,918

Non-GAAP net income per share, diluted $ 0

CONTACT: At Qorvo(TM) Doug DeLieto

VP, Investor Relations

336-678-7088

Steve Buhaly

CFO

503-615-9401

At the Financial Relations Board

Joe Calabrese

Vice President

212-827-3772

Source: Qorvo
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