Integrated Device Technology
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Jul 26,2010

IDT Reports Fiscal Q1 2011 Financial Results

SAN JOSE, Calif., Jul 26, 2010 (BUSINESS WIRE) -- Integrated Device Technology, Inc. (IDT(R))(NASDAQ:IDTI), a leading provider of essential mixed signal semiconductor solutions that enrich the digital media experience, today announced results for the fiscal first quarter ended June 27, 2010.

"We outgrew the broader semiconductor market in Q1 with a 15 percent sequential increase in revenue driven by broad based strength across our communications, computing and consumer end markets," said Dr. Ted Tewksbury, president and CEO of IDT. "Our secular growth story is beginning to materialize in fiscal 2011. We are defending and growing our core businesses while expanding our content in customers' systems with new analog-intensive mixed signal solutions to achieve higher growth rates. In addition, gross margin reached its highest level in four years, reflecting improved product mix and enabling us to deliver stronger than anticipated operating margins."

Recent Highlights

IDT recently announced:

  • Its entry into the smart grid market with its first family of metering ICs
  • The industry's most flexible, intelligent power management IC for portable consumer applications, with integrated CPU, audio, touch controller, battery charger, power management and other key functions
  • The industry's first motion-compensated frame rate conversion processors with integrated resolution-enhancement engine for use in 120Hz and 240Hz televisions and high-definition video projectors
  • The industry's first embedded DisplayPort(R)-based timing controller to support 3-D resolution in notebooks that use a Liquid Crystal Display (LCD) monitor
  • The world's first PCI Express(R) Gen3 family of timing devices
  • The world's first family of Serial RapidIO(R) Gen2 switches for use in the wireless infrastructure, defense, medical and industrial imaging, and professional video markets.
  • It extended its leadership in the memory interface market by announcing a next-generation integrated register and phase-locked loop (PLL) for DDR3 registered dual in-line memory modules (RDIMMs).
  • The newest members of the PureTouch(R) family of capacitive touch devices, targeting low-channel consumer, white goods and portable devices.

The following highlights the Company's financial performance on both a GAAP and non-GAAP basis. The GAAP results include certain costs, charges, gains and losses which are excluded from non-GAAP results based on management's determination that they are not directly reflective of on-going operations. Non-GAAP results are not in accordance with GAAP and may not be comparable to non-GAAP information provided by other companies. Non-GAAP information should be considered a supplement to, and not a substitute for, financial statements prepared in accordance with GAAP. A complete reconciliation of GAAP to non-GAAP results is attached to this press release.

  • Revenue for the fiscal first quarter of 2011 was $158.3 million, up 36 percent from $116.0 million reported in the same period one year ago.
  • GAAP net income for the fiscal first quarter of 2011 was $10.4 million or $0.06 per diluted share, versus a GAAP net loss of $14.1 million or a loss of approximately $0.09 per diluted share in the same period one year ago. Fiscal first quarter 2011 GAAP results include $5.8 million in acquisition and divestiture related charges, $4.7 million in stock-based compensation and $2.3 million in restructuring related costs.
  • Non-GAAP net income for the fiscal first quarter of 2011 was $23.3 million or $0.14 per diluted share, compared with non-GAAP net income of $3.5 million or $0.02 per diluted share reported in the same period one year ago.
  • GAAP gross profit for the fiscal first quarter of 2011 was $82.2 million, or 51.9 percent, compared with GAAP gross profit of $47.2 million in the same period one year ago. Non-GAAP gross profit for the fiscal first quarter of 2010 was $87.9 million, or 55.6 percent, compared with non-GAAP gross profit of $53.9 million reported in the same period one year ago.
  • GAAP R&D expense for the fiscal first quarter of 2011 was $43.7 million, compared with GAAP R&D expense of $36.3 million reported in the same period one year ago. Non-GAAP R&D expense for the fiscal first quarter of 2011 was $40.2 million, compared with Non-GAAP R&D of $32.2 million in the same period one year ago.
  • GAAP SG&A expense for the fiscal first quarter of 2011 was $27.4 million, compared with GAAP SG&A expense of $25.4 million in the same period one year ago. Non-GAAP SG&A expense for the fiscal first quarter of 2011 was $24.0 million, compared with non-GAAP SG&A expense of $18.9 million in the same period one year ago.

Webcast and Conference Call Information

Investors can listen to a live or replay webcast of the Company's quarterly financial conference call at http://www.IDT.com. The live webcast will begin at 1:30 p.m. Pacific time on July 26, 2010. The webcast replay will be available after 5 p.m. Pacific time on July 26, 2010.

Investors can also listen to the live call at 1:30 p.m. Pacific time on July 26, 2010 by calling (800) 230-1085 or (612) 288-0329. The conference call replay will be available after 5 p.m. Pacific time on July 26, 2010 through 11:59 p.m. Pacific time on August 2, 2010 at (800) 475-6701 or (320) 365-3844. The access code is 164352.

About IDT

With the goal of continuously improving the digital media experience, IDT integrates its fundamental semiconductor heritage with essential innovation, developing and delivering low-power, mixed signal solutions that help customers overcome their system challenges. Headquartered in San Jose, Calif., IDT has design, manufacturing and sales facilities throughout the world. IDT stock is traded on the NASDAQ Global Select Stock Market(R) under the symbol "IDTI." Additional information about IDT is accessible at www.IDT.com.

Forward Looking Statements

Investors are cautioned that forward-looking statements in this release, including but not limited to statements regarding demand for Company products, customer ordering patterns, channel inventory, anticipated trends in Company sales, expenses and profits, and macroeconomic conditions involve a number of risks and uncertainties that could cause actual results to differ materially from current expectations. Risks include, but are not limited to, global business and economic conditions, fluctuations in product demand, manufacturing capacity and costs, inventory management, competition, pricing, patent and other intellectual property rights of third parties, timely development and introduction of new products and manufacturing processes, dependence on one or more customers for a significant portion of sales, successful integration of acquired businesses and technology, availability of capital, cash flow and other risk factors detailed in the Company's Securities and Exchange Commission filings. The Company urges investors to review in detail the risks and uncertainties in the Company's Securities and Exchange Commission filings, including but not limited to the Annual Report on Form 10-K for the fiscal year ended March 28, 2010. All forward-looking statements are made as of the date of this release and the Company disclaims any duty to update such statements.

Non-GAAP Reporting

The Company presents non-GAAP financial measures because the financial community uses non-GAAP results in its analysis and comparison of historical results and projections of the Company's future operating results. These non-GAAP results exclude impairment charges, acquisition-related charges, share-based compensation expense and certain other expenses and benefits. Management uses these non-GAAP measures to manage and assess the profitability of the business. These non-GAAP results are also consistent with another way management internally analyzes IDT's results and may be useful to financial community. The Company has reconciled non-GAAP results to the most directly comparable GAAP financial measures in the financial tables at the end of this press release.

Reference to these non-GAAP results should be considered in addition to results that are prepared under general accepted accounting standards in the United States (GAAP), but should not be considered a substitute for results that are presented in accordance with GAAP. It should also be noted that IDT's non-GAAP information may be different from the non-GAAP information provided by other companies.

IDT, HQV, VersaClock, ViewXpand and the IDT logo are trademarks or registered trademarks of Integrated Device Technology, Inc. All other brands, product names and marks are or may be trademarks or registered trademarks used to identify products or services of their respective owners.

INTEGRATED DEVICE TECHNOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share data)
Three Months Ended
June 27, March 28, June 28,
2010 2010 2009
Revenues $ 158,273 $ 137,968 $ 115,954
Cost of revenues 76,107 71,086 68,789
Gross profit 82,166 66,882 47,165
Operating expenses:
Research and development 43,736 41,400 36,315
Selling, general and administrative 27,358 26,186 25,435
Total operating expenses 71,094 67,586 61,750
Operating gain (loss) 11,072 (704 ) (14,585 )
Gain on divestitures - 20 -
Interest income and other, net 275 711 1,425
Interest expense (11 ) (10 ) (19 )
Income (loss) before income taxes 11,336 17 (13,179 )
Provision (benefit) for income taxes 923 (950 ) 942
Net income (loss) $ 10,413 $ 967 $ (14,121 )
Basic net income (loss) per share $ 0.06 $ 0.01 $ (0.09 )
Diluted net income (loss) per share $ 0.06 $ 0.01 $ (0.09 )
Weighted average shares:
Basic 161,659 164,660 165,430
Diluted 162,577 165,418 165,430
INTEGRATED DEVICE TECHNOLOGY, INC.
RECONCILIATION OF GAAP TO NON-GAAP
(Unaudited)
(In thousands, except per share data)
Three Months Ended
June 27, March 28, June 28,
2010 2010 2009
GAAP Net Income (Loss) $ 10,413 $ 967 $ (14,121 )
GAAP Diluted Net Income (Loss) Per Share $ 0.06 $ 0.01 $ (0.09 )
Acquisition and Divestiture Related:
Amortization of acquisition related intangibles 4,924 4,943 5,219
Acquisition related costs (1) 708 1,130 3,593
Gain on divestitures (2) - (20 ) -
Assets impairment (3) (94 ) (251 ) 2,002
Fair market value adjustment to acquired inventory sold 262 - -
Restructuring Related:
Severance and retention costs 520 2,717 1,479
Facility closure costs (4) 977 547 23
Fabrication production transfer costs (5) 829 1,239 -
Other:
Compensation expense (benefit)--deferred compensation plan (6)

(126

)

370 889
Loss (gain) on deferred compensation plan securities (6) 132 (373 ) (876 )
Stock-based compensation expense 4,708 4,333 4,260
Tax effects of Non-GAAP adjustments (7) 24 (729 ) 1,008
Non-GAAP Net Income $ 23,277 $ 14,873 $ 3,476
GAAP weighted average shares - diluted 162,577 165,418 165,430
Non-GAAP adjustment 2,002 1,782 1,668
Non-GAAP weighted average shares - diluted (8) 164,579 167,200 167,098
Non-GAAP Diluted Net Income Per Share $ 0.14 $ 0.09 $ 0.02
GAAP Gross Profit 82,166 66,882 47,165
Acquisition and Divestiture Related:
Amortization of acquisition related intangibles 3,473 2,778 3,920
Acquisition related costs (1) 5 5 -
Assets impairment (3) (94 ) (251 ) 2,002
Fair market value adjustment to acquired inventory sold 262 - -
Restructuring Related:
Severance and retention costs 117 1,841 55
Facility closure costs (4) 699 182 8
Fabrication production transfer costs (5) 829 1,239 -
Other:
Compensation expense (benefit) - deferred compensation plan (6) (27 ) 52 124
Stock-based compensation expense 509 512 626
Non-GAAP Gross Profit 87,939 73,240 53,900
GAAP R&D Expenses: 43,736 41,400 36,315
Acquisition and Divestiture Related:
Amortization of acquisition related intangibles - (469 ) -
Acquisition related costs (1) (394 ) (378 ) 2
Restructuring Related:
Severance and retention costs (433 ) (752 ) (930 )
Facility closure costs (4) (108 ) (86 ) (11 )
Other:
Compensation expense (benefit) - deferred compensation plan (6) 82 (200 ) (480 )
Stock-based compensation expense (2,691 ) (2,278 ) (2,745 )
Non-GAAP R&D Expenses 40,192 37,237 32,151
GAAP SG&A Expenses: 27,358 26,186 25,435
Acquisition and Divestiture Related:
Amortization of acquisition related intangibles (1,451 ) (1,696 ) (1,299 )
Acquisition related costs (1) (309 ) (747 ) (3,595 )
Restructuring Related:
Severance and retention costs 30 (124 ) (494 )
Facility closure costs (4) (170 ) (279 ) (4 )
Other:
Compensation expense (benefit) - deferred compensation plan (6) 17 (118 ) (285 )
Stock-based compensation expense (1,508 ) (1,543 ) (889 )
Non-GAAP SG&A Expenses 23,967 21,679 18,869
GAAP Interest Income and Other, Net 264 701 1,406
Loss (gain) on deferred compensation plan securities (6) 132 (373 ) (876 )
Non-GAAP Interest Income and Other, Net 396 328 530
GAAP Provision (Benefit) for Income Taxes 923 (950 ) 942
Tax effects of Non-GAAP adjustments (7) (24 ) 729 (1,008 )
Non-GAAP Provision (Benefit) for Income Taxes 899 (221 ) (66 )

(1) Consists of costs incurred in connection with merger and acquisition-related activities, including legal and accounting fees.

(2) Consists of gain and loss associated with our divestitures of Military business and Silicon Logic Engineering business in Q3 2010 and divestiture of Network Search Engine business in Q2 2010.

(3) Consists of an impairment charge related to a note receivable and subsequent recoveries.

(4) Consists of ongoing costs associated with the exit of our leased facilities.

(5) Consists of costs incurred in connection with the transition of our wafer fabrication processes in Oregan plant to TSMC.

(6) Consists of gains and losses on marketable equity securities related to our deferred compensation arrangements and the changes in the fair value of the assets in a separate trust that is invested in Corporate owned life insurance under our deferred compensation plan.

(7) Consists of the tax effects of non-GAAP adjustments.

(8) For purposes of calculating non-GAAP diluted net income per share, the GAAP diluted weighted average shares outstanding is adjusted to exclude the benefits of stock compensation expense attributable to future services not yet recognized in the financial statements that are treated as proceeds assumed to be used to repurchase shares under the GAAP treasury method.

INTEGRATED DEVICE TECHNOLOGY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
June 27, March 28,
(In thousands) 2010 2010
ASSETS
Current assets:
Cash and cash equivalents $ 88,253 $ 120,526
Short-term investments 244,192 222,663
Accounts receivable, net 75,491 68,957
Inventories 49,677 50,676
Prepaid and other current assets 21,584 25,086
Total current assets 479,197 487,908
Property, plant and equipment, net 68,887 67,988
Goodwill 104,020 103,074
Acquisition-related intangibles 66,029 65,242
Other assets 26,487 26,733
TOTAL ASSETS $ 744,620 $ 750,945
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 37,665 $ 34,717
Accrued compensation and related expenses 22,703 20,738
Deferred income on shipments to distributors 20,535 18,761
Income taxes payable 2,724 2,132
Other accrued liabilities 24,879 30,353
Total current liabilities 108,506 106,701
Deferred tax liabilities 1,576 1,573
Long term income taxes payable 21,348 21,098
Other long term obligations 20,237 21,833
Total liabilities 151,667 151,205
Stockholders' equity 592,953 599,740
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 744,620 $ 750,945

SOURCE: Integrated Device Technology, Inc.

IDT Investor Relations
Mike Knapp, 408-284-6515
mike.knapp@idt.com
IDT Worldwide Marketing
Graham Robertson, 408-284-2644
graham.robertson@idt.com

Copyright Business Wire 2010





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