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RF Monolithics Reports Q2

DALLAS, Texas — RF Monolithics, Inc. (NASDAQ: RFMI) today reported net income of $77,000 or $0.01 per share for its second quarter ended February 28, 2011, compared to net income for the comparable prior year second quarter ended February 28, 2010 of $174,000 or $0.02 per share and net income for the first quarter of fiscal 2011 of $160,000 or $0.01 per share. Cumulative net income for the two quarters ended February 28, 2011 was $237,000 or $0.02 per share compared to $72,000 for the two quarters ended February 28, 2010 or $0.01 per share. The prior year’s cumulative first and second quarter results included $160,000 in costs and charges related to the early termination of a bank agreement.

The Company reported gross margins in the FY ’11 second quarter of 36.0%, compared to 34.8% for the prior year and 35.4% for its trailing first quarter. Year-to-date gross margins were 35.6%, compared to 33.6% for the prior year.

The net income reported above related to second quarter sales of $7.6 million, representing a 4% decrease from $7.9 million in sales for the second quarter of FY ’10 and an 11% decrease from $8.5 million in sales for the first quarter of the current year. Historically, RFM’s second quarter produces lower sales compared to its first quarter due to the seasonal effects that the holidays, which fall in the Company’s fiscal second quarter, have on production schedules for its worldwide customer base. For the first two quarters of fiscal 2011, sales were $16.1 million, compared to sales of $16.3 million for the first two quarters of the prior year.

The Company recently announced the appointment of Farlin A. Halsey as President and CEO from his prior position as Senior Vice President of Marketing and M2M Business. Mr. Halsey, who has over 20 years of industry experience, replaces David M. Kirk, who resigned to become President of Murata Electronics of North America, Inc., a subsidiary of Murata Manufacturing Co., Ltd. (Murata).

RFM’s Farlin A. Halsey said, “I believe the company is well positioned for growth, with opportunities ranging from further penetration in our base business segments, to strategic initiatives to enhance our M2M and frequency control businesses, in addition to our expanding relationship with Murata, including collaboration on a variety of products and markets. This is reminiscent of past companies I have been associated with that had strong product portfolios and ultimately generated substantial growth in sales and income. I am excited about RFM’s opportunities for growth.”

“While the expected seasonal decrease in sales and net income in our second quarter occurred, we are encouraged by a positive book to bill ratio and we continue to see and pursue numerous opportunities for our products. We were pleased to report an increase in gross margins, which reflected a favorable product mix resulting from our efforts to focus on higher margin products. Our operating expenses increased somewhat from last year, but that largely resulted from budgeted initiatives and programs designed to generate future sales increases. Our business model is such that we were still able to generate profitability and substantial levels of Adjusted EBITDA, despite our seasonal decrease in sales. The change in our banking relationship and our improved financial condition significantly decreased interest expense since last year,” Halsey said.

Halsey also said, “RFM has significant business in Japan, both with customers and suppliers. We were saddened by the disaster that occurred there and are attempting, like other concerned companies and persons, to assist in a variety of ways. Only one of our contract manufacturers is located in Japan, and they report that their facilities sustained no significant damage and that production has resumed this week. Additionally, we continue to watch for any indirect effects this disaster may have on the supply chains of various markets.”

“As we look forward to the balance of fiscal 2011, we expect to continue to launch products and improve our sales channels in ways that, if successful, give us an excellent opportunity to grow sales. We believe our breadth of products is well suited to meet the needs of new and existing customers. As mentioned in a previous release, I will discuss our go-forward strategy regarding our base business, our M2M initiative and the Murata collaboration during today’s earnings call,” Halsey stated.

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