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“While Applied has delivered significant innovations with our SunFab production line and made substantial progress on our technology roadmap, the thin film market has been negatively impacted by several factors, including delays in utility- scale solar adoption, solar panel manufacturers’ challenges in obtaining affordable capital, changes and uncertainty in government renewable energy policies, and competitive pressure from crystalline silicon technologies,” said Mike Splinter, chairman and CEO of Applied Materials. “Led by Mark Pinto, EES will focus on our industry-leading crystalline silicon solar business and on pursuing other opportunities in advanced energy technologies like LED lighting.”
The company also plans to divest its low-emissivity architectural glass coating products, while continuing development activities in emerging technologies such as “smart” electrochromic glass.
The cost of implementing the EES restructuring plan is expected to be in the range of approximately $375 million to $425 million, or $0.18 to $0.21 per share, which will be reported as cost of products sold and restructuring and asset impairments in the company’s consolidated statements of operations for the third quarter of fiscal 2010. As part of the total pre-tax cost, Applied anticipates that it will record
1. inventory charges of up to $240 million
2. equipment and intangible assets impairment charges of up to $95 million
3. employee severance of up to $50 million; and (iv) other obligations of up to $40 million. This action is expected to impact between 400 to 500 positions globally. A number of affected employees may transfer to other groups or functions within the company. Cash expenditures related to these charges are expected to be no more than $80 million. In addition to the charges under the EES plan, the company will record a favorable adjustment of approximately $20 million to the restructuring plan previously announced on November 11, 2009 due to changes in business requirements.
In May, the company announced its target for non- GAAP EPS for the third quarter of fiscal 2010 of between $0.22 and $0.26 per share, which did not include any potential restructuring charges. The
revised target is for non-GAAP earnings of $0.10 to $0.14 per share, which would have been at the high end of the previous target after taking into account the approximately $0.14 per share impact of the inventory charges and other obligations related to today’s actions.
RFMD Repurchases and Retires $110 Million
Since the firm repurchased and retired the 2012 Notes early, paying $0.97 per $1.00 of par value for the 2012 Notes and retiring the 2010 Notes at maturity, the aggregate principal amount of 2012 Notes outstanding is now $97.7 million.
RF Micro Devices has repurchased and retired $110 million aggregate principal amount of its outstanding convertible subordinated notes, using cash on hand.
The retired convertible subordinated notes consist of $100,000,000 aggregate principal amount of convertible subordinated notes due 2012 (the “2012 Notes”), equal to 51% of all outstanding 2012 Notes, and $10,000,000 aggregate principal amount of convertible subordinated notes due 2010 (the “2010 Notes”), equal to 100% of all outstanding 2010 Notes.
RFMD repurchased and retired the 2012 Notes early, paying $0.97 per $1.00 of par value for the 2012 Notes, and RFMD retired the 2010 Notes at maturity, paying the principal, or face, amount of the 2010 Notes. The aggregate principal amount of 2012 Notes outstanding is now $97.7 million.
RFMD expects to eliminate future cash interest expense of approximately $1.3 million between now and when the 2012 Notes mature in April 2012 as a result of the repurchase and early retirement of the $100,000,000 aggregate principal amount of the 2012 Notes. Since the March 2008 quarter, RFMD has repurchased 30 million shares of its common stock and retired approximately $372 million original principal amount of its total convertible debt.
Dean Priddy, CFO of RFMD, said, “RFMD’s robust business model and resulting strong free cash flow are enabling us to enhance our capital structure significantly. Looking forward, we are forecasting continued strong free cash flow, and our potential uses of cash include share buybacks, additional
August/September 2010
www.compoundsemiconductor.net 209
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