RF Micro Devices (RFMD)

General and Administrative

The increase in general and administrative expenses for the three- and nine-months ended December 27, 2008 was due to an increase in headcount and related personnel expenses attributable in part to both our recent acquisitions and an increase in share-based compensation expense.

Other Operating Expense

Goodwill Impairment

As a result of an interim impairment review, we subsequently concluded that as of November 22, 2008, the fair value of both of our reporting units was below their respective carrying values.  As such, we began a preliminary step-two analysis in accordance with SFAS 142.  Due to the complexities involved in determining the implied fair value of the goodwill of each reporting unit, the step-two analysis has not been completed.  Based on the work performed and in accordance with paragraph 22 of SFAS 142, we recorded an estimated goodwill impairment charge in the amount of $609.0 million in “other operating expense” in the condensed consolidated statements of operations for the three- and nine-month periods ended December 27, 2008.  We expect to finalize our goodwill impairment analysis during the fourth quarter of fiscal 2009.  Material adjustments to the goodwill impairment charge could be made when the goodwill impairment test is completed.  Any adjustments to our preliminary estimates as a result of completing this evaluation will be recorded in our financial statements for the quarter ending March 28, 2009 (see Note 7 to the Condensed Consolidated Financial Statements).

Intangible Assets

We performed an impairment analysis of our finite-lived intangible assets based on a comparison of the undiscounted cash flows to the recorded carrying value of the intangible assets and it was determined that an impairment indicator was present.   As a result of the impairment indicator, we were required to determine the fair value of our finite-lived intangible assets and compare the fair value to the carrying value.  The value of acquired developed technology was determined by discounting forecasted cash flow directly related to the developed technology, net of returns on contributory assets.  The value of acquired customer relationships is based on the benefit derived from the incremental revenue and related cash flow as a direct result of the customer relationship.  These forecasted cash flows are discounted to present value using an appropriate discount rate.  As a result, the carrying value exceeded the fair value and we recorded impairments of $31.9 million related to developed technology and $32.2 million related to customer relationships.  The impairment charges were recorded in “other operating expense” in the condensed consolidated statements of operations for the three- and nine-month periods ended December 27, 2008 (see Note 7 to the Condensed Consolidated Financial Statements).

Restructuring and Impairment of Property and Equipment

In the third quarter of fiscal 2009, we initiated a restructuring to reduce our manufacturing capacities and costs due to lower demand for our products in the quarter as well as lower forecasted demand attributable primarily to the overall global economic slowdown.  The restructuring will decrease our workforce in our fabrication facilities and impair certain related fabrication assets.  As a result of these restructuring activities, we recorded $53.3 million of expenses for the three- and nine-month periods ended December 27, 2008 (see Note 10 to the condensed Consolidated Financial Statements).

In the first quarter of fiscal 2009, we initiated a restructuring to reduce investments in wireless systems, including cellular transceivers and GPS solutions, in order to focus on our RF component opportunities.  Additionally, we have consolidated our production test facilities in an effort to reduce cycle time, better serve our customer base and improve our overall profitability.  As a result of these restructuring activities, we recorded $4.7 million and $48.4 million of expenses for the three- and nine-month periods ended December 27, 2008, respectively (see Note 10 to the Condensed Consolidated Financial Statements). 

Other

In the third quarter of fiscal 2009, we recorded $3.5 million in “other operating expense” for the sale of patents related to certain of our products.  In addition, in the first quarter of fiscal 2009 we recorded $1.4 million in expenses related to the in-process research and development with no alternative future use that we acquired from UMC to “other operating expense” at the acquisition date in accordance with SFAS 141, “Business Combinations” (see Note 11 to the Condensed Consolidated Financial Statements).

In the third quarter of fiscal 2008, in-process research and development with no alternative future use that we acquired from Sirenza ($13.9 million) was charged to “other operating expense” at the acquisition date in accordance with SFAS 141, “Business Combinations.”

GENERAL AND ADMINISTRATIVE

The increase in general and administrative expenses for the three months ended June 28, 2008 as compared to the three months ended June 30, 2007 was primarily due to an increase in headcount and related personnel expenses which was partially due to our recent acquisitions.

GENERAL AND ADMINISTRATIVE

The increase in general and administrative expenses for the three and nine months ended December 29, 2007 was primarily due to increases in administrative expenses associated with the Sirenza acquisition.

GENERAL AND ADMINISTRATIVE 

The decrease in general and administrative expenses for the three and six months ended September 29, 2007 was primarily due to a decrease in personnel expenses and share-based compensation expense.

GENERAL AND ADMINISTRATIVE

The decrease in general and administrative expenses for the three months ended June 30, 2007 as compared to the three months ended July 1, 2006 was primarily due to a decrease in personnel expenses.  Due to the decrease in revenue, general and administrative expenses have increased slightly as a percentage of revenue.

GENERAL AND ADMINISTRATIVE

The increase in general and administrative expenses for the three and six months ended September 30, 2006 as compared to the three and six months ended September 30, 2005 was primarily due to an increase in share-based compensation expense of $4.3 million and $5.2 million for the three and six months ended September 30, 2006, respectively, which resulted from the adoption of SFAS 123(R) on April 2, 2006 and an increase in personnel expenses.  We expect that general and administrative expenses will continue to increase in absolute dollars in future periods.