January 31, 2011

IDT Reports Fiscal Q3 2011 Financial Results

$153.2 Million in Revenue

GAAP GM of 53.9 Percent; Non-GAAP GM of 57.5 Percent

GAAP EPS of $0.07; Non-GAAP EPS of $0.15

SAN JOSE, Calif.--(BUSINESS WIRE)-- Integrated Device Technology, Inc. (IDT®) (NASDAQ: IDTI), the Analog and Digital Company™ delivering essential mixed-signal semiconductor solutions, today announced results for the fiscal third quarter ended January 2, 2011.

"Our third quarter results were in line with our prior projections as we continue to execute our long-term strategy," said Dr. Ted Tewksbury, president and CEO of IDT. "We made significant progress reducing channel inventories during the quarter, while growing sales in the enterprise computing end market. We are well positioned to accelerate revenue and earnings growth in the second half of this calendar year as our core business improves and new products continue to ramp, driven by cloud computing and the rollout of 4G/LTE wireless infrastructure."

Recent Highlights

IDT recently announced:

  • The world's first Serial RapidIO Gen2 switches with virtual channel and security functionality to improve network performance and scalability of 4G LTE deployment.
  • The industry's first fully JEDEC-compliant Memory Buffer for DDR3 LRDIMM, enabling a new generation of DDR3 memory technology for servers, workstations and storage equipment.
  • It demonstrated the world's lowest power DDR3 register running at an industry-first 1,867Mbps in a standard server at the Supercomputing 2010 (SC10) conference.
  • The industry's first signal-conditioning re-timers that are fully compliant with the upcoming release of the PCI Express® 3.0 standard, for use in servers, enterprise storage and communications systems.
  • The industry's first single-layer multi-touch capacitive touch screen controller, which simplifies the sensor manufacturing process and lowers cost without sacrificing features or performance.
  • It demonstrated the world's first usage of the DisplayPortTM auxiliary channel to carry touch screen data to the operating system in tablets, notebooks and other display devices.
  • The introduction of the industry's first DisplayPort-over-Ethernet adapter based on the IDT VLX1000 PanelPortTM LinkXtendTM device.
  • A new family of DisplayPort-to-HDMI or DVI translators targeted at tablet and multi-monitor applications.
  • Its new real-time clock with temperature compensation, providing high accuracy and ultra-low power for use in utility metering, HVAC, point-of-sale terminals, security alarms, vending machines and other security-related equipment.

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 third quarter of 2011 was $153.2 million, up 8 percent from $142.5 million reported in the same period one year ago.
  • GAAP net income for the fiscal third quarter of 2011 was $10.6 million or $0.07 per diluted share, versus a GAAP net loss of $7.4 million or a loss of $0.04 per diluted share in the same period one year ago. Fiscal third quarter 2011 GAAP results include $5.6 million in acquisition and divestiture related charges, $4.5 million in stock-based compensation and $3.3 million in restructuring-related costs.
  • Non-GAAP net income for the fiscal third quarter of 2011 was $23.0 million or $0.15 per diluted share, compared with non-GAAP net income of $17.3 million or $0.10 per diluted share reported in the same period one year ago.
  • GAAP gross profit for the fiscal third quarter of 2011 was $82.5 million, or 53.9 percent, compared with GAAP gross profit of $59.7 million, or 41.9 percent, in the same period one year ago. Non-GAAP gross profit for the fiscal third quarter of 2011 was $88.2 million, or 57.5 percent, compared with non-GAAP gross profit of $72.8 million, or 51.1 percent, reported in the same period one year ago.
  • GAAP R&D expense for the fiscal third quarter of 2011 was $46.1 million, compared with GAAP R&D expense of $38.3 million reported in the same period one year ago. Non-GAAP R&D expense for the fiscal third quarter of 2011 was $41.3 million, compared with non-GAAP R&D of $34.6 million in the same period one year ago.
  • GAAP SG&A expense for the fiscal third quarter of 2011 was $27.1 million, compared with GAAP SG&A expense of $24.8 million in the same period one year ago. Non-GAAP SG&A expense for the fiscal third quarter of 2011 was $23.3 million, compared with non-GAAP SG&A expense of $21.0 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 January 31, 2011. The webcast replay will be available after 5 p.m. Pacific time on January 31, 2011.

Investors can also listen to the live call at 1:30 p.m. Pacific time on January 31, 2011 by calling (800) 230-1096 or (612) 332-0107. The conference call replay will be available after 5 p.m. Pacific time on January 31, 2011 through 11:59 p.m. Pacific time on February 7, 2011 at (800) 475-6701 or (320) 365-3844. The access code is 188185.

About IDT

Integrated Device Technology, Inc., the Analog and Digital Company™, combines analog and digital technology to develop system-level innovations that optimize customers' applications and enrich the end-user experience. IDT uses its market leadership in timing, serial switching and interfaces, and adds analog and system expertise to provide complete application-optimized, mixed-signal solutions for the communications, computing and consumer segments. 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® under the symbol "IDTI." Additional information about IDT is accessible at www.IDT.com. Follow IDT on Twitter and Facebook.

Forward Looking Statements

Investors are cautioned that forward-looking statements in this release, including but not limited to statements regarding demand for Company products, anticipated trends in Company sales, expenses and profits, 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 investor 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 restructuring-related costs, acquisition and divestiture-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 investor 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, PanelPort, LinkXtend 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               Nine Months Ended
Jan. 2 Sept 26, Dec. 27, Jan. 2 Dec. 27,
  2011   2010   2009     2011   2009  
Revenues $ 153,230 $ 166,907 $ 142,480 $ 478,410 397,938
Cost of revenues   70,755   76,613   82,751     223,475     239,913  
Gross profit 82,475 90,294 59,729 254,935 158,025
Operating expenses:
Research and development 46,143 43,986 38,316 133,865 116,086
Selling, general and administrative   27,056   26,841   24,754     81,255     80,851  
Total operating expenses   73,199   70,827   63,070     215,120   196,937  
 
Operating income (loss)   9,276   19,467   (3,341 )   39,815   (38,912 )
 
Gain (loss) on divestitures - - (4,461 ) - 78,286
Interest income and other, net   1,352   1,177   582     2,793   3,176  
 
Income (loss) before income taxes 10,628 20,644 (7,220 ) 42,608 42,550
Provision for income taxes   31   420   147     1,374     3,498  
 
Net income (loss) $ 10,597 $ 20,224 $ (7,367 ) $ 41,234   39,052  
 
Basic net income (loss) per share $ 0.07 $ 0.13 $ (0.04 ) $ 0.27 $ 0.24
Diluted net income (loss) per share $ 0.07 $ 0.13 $ (0.04 ) $ 0.27 $ 0.24
 
Weighted average shares:
Basic 151,421 157,021 165,954 154,487 165,658
Diluted 152,975 157,649 165,954 155,525 166,114
 
 
INTEGRATED DEVICE TECHNOLOGY, INC.
RECONCILIATION OF GAAP TO NON-GAAP
(Unaudited)
(In thousands, except per share data)   Three Months Ended         Nine Months Ended
Jan. 2     Sept 26,     Dec. 27,           Jan. 2     Dec. 27,
  2011     2010     2009     2011     2009  
 
GAAP Net Income (loss) $ 10,597   $ 20,224   $ (7,367 ) $ 41,234   $ 39,052  
GAAP Diluted Net Income (loss) Per Share $ 0.07   $ 0.13   $ (0.04 ) $ 0.27   $ 0.24  
Acquisition and Divestiture Related:
Amortization of acquisition related intangibles 4,990 5,003 4,803 14,917 16,131
Acquisition related costs (1) 694 432 (254 ) 1,834 3,692
Gain (loss) on divestitures (2) - - 4,461 - (78,286 )
Assets impairment (3) (107 ) (183 ) (149 ) (384 ) 1,853
Fair market value adjustment to acquired inventory sold - 117 8,421 379 16,055
Restructuring Related: 0
Severance and retention costs (benefit) 1,573 (125 ) 2,297 1,968 17,797
Facility closure costs (4) 124 285 23 1,386 59
Fabrication production transfer costs (5) 1,639 1,383 783 3,851 1,105
Other:
Compensation expense (benefit)—deferred compensation plan (6) 815 616 521 1,305 2,522
Loss (gain) on deferred compensation plan securities (6) (793 ) (599 ) (510 ) (1,260 ) (2,497 )
Stock-based compensation expense 4,513 3,986 4,163 13,207 12,342
Tax effects of Non-GAAP adjustments (7)   (1,073 )   (705 )   136     (1,754 )   3,172  
Non-GAAP Net Income $ 22,972 $ 30,434 $ 17,328 $ 76,683 $ 32,997
GAAP weighted average shares - diluted 152,975 157,649 166,501 155,525 166,501
Non-GAAP adjustment 2,058 2,087 1,946 1,945 1,745
Non-GAAP weighted average shares - diluted (8)   155,033     159,736     168,447     157,470     168,246  
Non-GAAP Diluted Net Income Per Share $ 0.15   $ 0.19   $ 0.10   $ 0.49   $ 0.20  
 
GAAP Gross Profit   82,475     90,294     59,729     254,935     158,025  
Acquisition and Divestiture Related:
Amortization of acquisition related intangibles 3,549 3,536 2,996 10,558 11,178
Acquisition related costs (1) - - 5 -
Assets impairment (3) (107 ) (183 ) (216 ) (384 ) 1,786
Fair market value adjustment to acquired inventory sold - 117 8,421 379 16,055
Restructuring Related:
Severance and retention costs (benefit) 48 (175 ) 386 (10 ) 6,149
Facility closure costs (4) 4 197 9 900 21
Fabrication production transfer costs (5) 1,639 1,383 783 3,851 1,105
Other:
Compensation expense (benefit) - deferred compensation plan (6) 176 133 73 282 353
Stock-based compensation expense   370     381     630     1,260     2,251  
Non-GAAP Gross Profit   88,154     95,683     72,811     271,776     196,923  
 
GAAP R&D Expenses:   46,143     43,986     38,316     133,865     116,086  
Acquisition and Divestiture Related:
Acquisition related costs (1) (400 ) (402 ) - (1,196 ) 2
Restructuring Related:
Severance and retention costs (benefit) (1,053 ) 98 (1,190 ) (1,388 ) (4,177 )
Facility closure costs (4) (6 ) (8 ) (11 ) (122 ) (27 )
Other:
Compensation expense (benefit) - deferred compensation plan (6) (529 ) (400 ) (281 ) (847 ) (1,361 )
Stock-based compensation expense   (2,836 )   (2,458 )   (2,246 )   (7,985 )   (7,921 )
Non-GAAP R&D Expenses   41,319     40,816     34,588     122,327     102,602  
 
GAAP SG&A Expenses:   27,056     26,841     24,754     81,255     80,851  
Acquisition and Divestiture Related:
Amortization of acquisition related intangibles (1,441 ) (1,467 ) (1,807 ) (4,359 ) (4,953 )
Acquisition related costs (1) (294 ) (30 ) 254 (633 ) (3,694 )
Restructuring Related:
Severance and retention costs (472 ) (148 ) (721 ) (590 ) (7,471 )
Facility closure costs (4) (114 ) (80 ) (3 ) (364 ) (11 )
Other:
Compensation expense (benefit) - deferred compensation plan (6) (110 ) (83 ) (167 ) (176 ) (808 )
Stock-based compensation expense   (1,307 )   (1,147 )   (1,287 )   (3,962 )   (2,170 )
Non-GAAP SG&A Expenses   23,318     23,886     21,023     71,171     61,744  
 
GAAP Interest Income and Other, Net 1,352 1,177 582 2,793 3,176
Loss (gain) on deferred compensation plan securities (6) (793 ) (599 ) (510 ) (1,260 ) (2,497 )
Assets Impairment   -     -     67     -     67  
Non-GAAP Interest Income and Other, Net   559     578     139     1,533     746  
 
GAAP Provision for Income Taxes   31     420     147     1,374     3,498  
Tax effects of Non-GAAP adjustments (7)   1,073     705     (136 )   1,754     (3,172 )
Non-GAAP Provision for Income Taxes   1,104     1,125     11     3,128     326  
 
 

(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 Q3FY10 and Network Search Engine business in Q2FY10.

 

(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 Oregon 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)
 
Jan. 2 Mar 28,
(In thousands) 2011       2010
 
ASSETS
Current assets:
Cash and cash equivalents $ 93,358 $ 120,526
Short-term investments 214,849 222,663
Accounts receivable, net 69,080 68,957
Inventories 61,406 50,676
Prepaid and other current assets 22,959       25,086
Total current assets 461,652 487,908
 
Property, plant and equipment, net 67,379 67,988
Goodwill 104,020 103,074
Acquisition-related intangibles assets, net 56,037 65,242
Other assets 29,913       26,733
TOTAL ASSETS $ 719,001       $ 750,945
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 33,766 $ 34,717
Accrued compensation and related expenses 26,388 20,738
Deferred income on shipments to distributors 15,472 18,761
Income taxes payable 1,386 513
Other accrued liabilities 35,443       31,972
Total current liabilities 112,455 106,701
 
Long term income taxes payable 21,254 21,098
Other long term obligations 18,250       23,406
Total liabilities 151,959 151,205
 
Stockholders' equity
Common Stock 149 163
Additional paid-in capital 2,333,211 2,310,450
Treasury stock (899,137) (802,217)
Accumulated deficit (868,468) (909,702)
Accumulated other comprehensive income 1,287       1,046
Total stockholders' equity 567,042       599,740
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 719,001       $ 750,945

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

Source: Integrated Device Technology, Inc.

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