May 9, 2011

IDT Reports Q4 and Fiscal Year End 2011 Financial Results

Q4 Revenue of $147.3 Million

FY 2011 Revenue of $625.7 Million

Q4 GAAP GM of 54.6 Percent; Q4 Non-GAAP GM of 57.3 Percent

Q4 GAAP EPS of $0.21; Q4 Non-GAAP EPS of $0.13

FY 2011 GAAP EPS of $0.47; FY 2011 Non-GAAP EPS of $0.61

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 fourth quarter and year ended April 3, 2011.

"Our better-than-expected fourth quarter results reflected increasing adoption of our mixed-signal solutions by enterprise computing and wireless infrastructure customers, and highlighted continuing gross margin expansion and solid execution across all of our business units," said Dr. Ted Tewksbury, president and CEO of IDT. "We grew revenue 17 percent in fiscal 2011 from the prior year despite significant old product rolloffs like advanced memory buffers, network search engines, and PC clocks. New product revenue grew by more than 60 percent, and our core businesses had an outstanding year as we grew communications clock revenue 40 percent to a record high and our DDR3 memory interface revenue doubled. We also more than doubled our non-GAAP operating income and EPS in fiscal 2011 from the prior year while gross margins reached a 10-year high.

"As we enter fiscal year 2012, we believe that continued growth in our new and core businesses, driven by cloud computing and the ongoing deployment of 4G/LTE wireless infrastructure, will drive continuing top line improvement. By focusing on higher margin solutions and maintaining disciplined operating expense controls, we believe we can continue to demonstrate significant leverage in our model and deliver improved value for our shareholders."

Recent Highlights

IDT recently announced:

  • It introduced its first RF (Radio Frequency) device for use in the RF signal path of multi-protocol wireless base stations. The new Intermediate Frequency (IF) Variable Gain Amplifier (VGA) with the industry's lowest noise to improve Quality of Service is the first in a series of upcoming RF products.
  • It has introduced a new low power, high accuracy thermal sensor for DDR3 memory modules (Enhanced Temp Sensor) to complement its recently announced DDR3 memory buffer for Load Reduced DIMMs (LRDIMM) targeted at Cloud Computing applications.
  • The industry's widest range poly-phase power metering products for Smart Grid applications (3 phase power meter IC) expanding its award winning single-phase power metering products.
  • The industry's first signal-conditioning repeater to pass all tests required for full compliance with the Serial Advanced Technology Attachment (SATA) 6Gb/s standard for Hard Disk Drive (HDD) and Solid State Drive (SSD) interfaces.
  • It expanded its Gen 2 RapidIO switch family with an intermediate sized switch in response to market demand and announced a design with Curtiss Wright for the new device.
  • Its RapidIO® Gen2 switch has been selected by Texas Instruments for its new evaluation module for wireless base stations.
  • Its RapidIO switch has been selected by RADVISION Ltd. for use in its SCOPIA Elite multipoint video conference system.
  • Its PureTouch® capacitive touch controller has been selected for use in the Hanvon WISEreader, a popular e-book reader.
  • Its PowerSmart™ Panel Controller won the prestigious Innovation Award presented by EDN magazine
  • Its Power Metering IC won the Green Power Product Award from Electronic Engineering and Product World Magazine.

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 ongoing 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 fourth quarter of 2011 was $147.3 million, up from $138.0 million reported in the same period one year ago. Revenue for fiscal year 2011 was $625.7 million, up 17 percent from $535.9 million in fiscal year 2010.
  • GAAP net income for the fiscal fourth quarter of 2011 was $31.4 million or $0.21 per diluted share, versus GAAP net income of $1.0 million or $0.01 per diluted share in the same period one year ago. Fiscal fourth quarter 2011 GAAP results include $19.7 million in tax effects, $5.1 million in acquisition and divestiture related charges and $3.3 million in stock-based compensation.
  • Non-GAAP net income for the fiscal fourth quarter of 2011 was $20.2 million or $0.13 per diluted share, compared with non-GAAP net income of $14.9 million or $0.09 per diluted share reported in the same period one year ago. Non-GAAP net income for fiscal year 2011 was $96.9 million, more than doubling from $47.9 million in fiscal year 2010.
  • GAAP gross profit for the fiscal fourth quarter of 2011 was $80.4 million, or 54.6 percent, compared with GAAP gross profit of $66.9 million, or 48.5 percent, in the same period one year ago. Non-GAAP gross profit for the fiscal fourth quarter of 2011 was $84.4 million, or 57.3 percent, compared with non-GAAP gross profit of $73.2 million, or 53.0 percent, reported in the same period one year ago. Non-GAAP gross profit for fiscal year 2011 was $356.2 million, up from $270.2 million in fiscal 2010.
  • GAAP R&D expense for the fiscal fourth quarter of 2011 was $43.7 million, compared with GAAP R&D expense of $41.4 million reported in the same period one year ago. Non-GAAP R&D expense for the fiscal fourth quarter of 2011 was $41.6 million, compared with non-GAAP R&D of $37.2 million in the same period one year ago.
  • GAAP SG&A expense for the fiscal fourth quarter of 2011 was $26.9 million, compared with GAAP SG&A expense of $26.2 million in the same period one year ago. Non-GAAP SG&A expense for the fiscal fourth quarter of 2011 was $24.0 million, compared with non-GAAP SG&A expense of $21.7 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 May 9, 2011. The webcast replay will be available after 5 p.m. Pacific time on May 9, 2011.

Investors can also listen to the live call at 1:30 p.m. Pacific time on May 9, 2011 by calling (800) 230-1059 or (612) 234-9959. The conference call replay will be available after 5 p.m. Pacific time on May 9, 2011 through 11:59 p.m. Pacific time on May 16, 2011 at (800) 475-6701 or (320) 365-3844. The access code is 198224.

About IDT

Integrated Device Technology, Inc., the Analog and Digital Company™, develops system-level solutions that optimize its customers' applications. 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 Facebook, LinkedIn, Twitter, and YouTube.

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, PureTouch, PowerSmart, 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 Twelve Months Ended
April 3, Jan. 2, March 28, April 3, March 28,
2011 2011   2010 2011 2010
Revenues $ 147,294 $ 153,230 $ 137,968 $ 625,704 535,906
Cost of revenues   66,919     70,755     71,086     290,394     310,999  
Gross profit 80,375 82,475 66,882 335,310 224,907
Operating expenses:
Research and development 43,681 46,143 41,400 177,546 157,486
Selling, general and administrative   26,936     27,056     26,186     108,191     107,037  
Total operating expenses   70,617     73,199     67,586     285,737     264,523  
 
Operating income (loss)   9,758     9,276     (704 )   49,573     (39,616 )
 
Gain on divestitures - - 20 - 78,306
Interest income and other, net   904     1,352     701     3,697     3,877  
 
Income before income taxes 10,662 10,628 17 53,270 42,567
Provision (benefit) for income taxes   (20,731 )   31     (950 )   (19,357 )     2,548  
 
Net income $ 31,393   $ 10,597   $ 967   $ 72,627     40,019  
 
Basic net income per share $ 0.21 $ 0.07 $ 0.01 $ 0.47 $ 0.24
Diluted net income per share $ 0.21 $ 0.07 $ 0.01 $ 0.47 $ 0.24
 
Weighted average shares:
Basic 148,181 151,421 164,660 154,511 165,408
Diluted 150,852 152,975 165,418 155,918 165,961
 
 
INTEGRATED DEVICE TECHNOLOGY, INC.
RECONCILIATION OF GAAP TO NON-GAAP
(Unaudited)
 
(In thousands, except per share data)   Three Months Ended   Twelve Months Ended
April 3,   Jan. 2,   Mar. 28,   April 3,   Mar. 28,
2011 2011 2010 2011 2010
GAAP Net Income $ 31,393   $ 10,597   $ 967   $ 72,627   $ 40,019  
GAAP Diluted Net Income Per Share $ 0.21   $ 0.07   $ 0.01   $ 0.47   $ 0.24  
Acquisition and Divestiture Related:
Amortization of acquisition related intangibles 5,016 4,990 4,943 19,933 21,074
Acquisition related costs (1) 98 694 1,130 1,932 4,822
Gain on divestitures (2) - - (20 ) - (78,306 )
Assets impairment (3) (63 ) (107 ) (251 ) (447 ) 1,602
Fair market value adjustment to acquired inventory sold - - 379 16,055
Restructuring Related:
Severance and retention costs 137 1,573 2,717 2,105 20,514
Facility closure costs (4) (1,353 ) 124 547 33 606
Fabrication production transfer costs (5) 1,412 1,639 1,239 5,263 2,344
Other:
Compensation expense —deferred compensation plan (6) 503 815 370 1,808 2,892
Gain on deferred compensation plan securities (6) (507 ) (793 ) (373 ) (1,767 ) (2,870 )
Stock-based compensation expense 3,321 4,513 4,333 16,528 16,675
Tax effects of Non-GAAP adjustments (7)   (19,710 )   (1,073 )   (729 )   (21,464 )   2,443  
Non-GAAP Net Income $ 20,247 $ 22,972 $ 14,873 $ 96,930 $ 47,870
GAAP weighted average shares - diluted 150,852 152,975 165,418 155,918 165,961
Non-GAAP adjustment 1,775 2,058 1,782 1,989 1,799
Non-GAAP weighted average shares - diluted (8)   152,627     155,033     167,200     157,907     167,760  
Non-GAAP Diluted Net Income Per Share $ 0.13   $ 0.15   $ 0.09   $ 0.61   $ 0.29  
 
GAAP Gross Profit   80,375     82,475     66,882     335,310     224,907  
Acquisition and Divestiture Related:
Amortization of acquisition related intangibles 3,575 3,549 2,778 14,133 13,956
Acquisition related costs (1) - - 5 5 5
Assets impairment (3) (63 ) (107 ) (251 ) (447 ) 1,535
Fair market value adjustment to acquired inventory sold - - - 379 16,055
Restructuring Related:
Severance and retention costs 51 48 1,841 41 7,990
Facility closure costs (4) (1,483 ) 4 182 (583 ) 203
Fabrication production transfer costs (5) 1,412 1,639 1,239 5,263 2,344
Other:
Compensation expense - deferred compensation plan (6) 109 176 52 391 405
Stock-based compensation expense   423     370     512     1,683     2,763  
Non-GAAP Gross Profit   84,399     88,154     73,240     356,175     270,163  
 
GAAP R&D Expenses:   43,681     46,143     41,400     177,546     157,486  
Acquisition and Divestiture Related:
Amortization of acquisition related intangibles - - (469 ) 0 (469 )
Acquisition related costs (1) (67 ) (400 ) (378 ) (1,263 ) (376 )
Restructuring Related:
Severance and retention costs (45 ) (1,053 ) (752 ) (1,433 ) (4,929 )
Facility closure costs (4) (82 ) (6 ) (86 ) (204 ) (113 )
Other:
Compensation expense - deferred compensation plan (6) (326 ) (529 ) (200 ) (1,173 ) (1,561 )
Stock-based compensation expense   (1,610 )   (2,836 )   (2,278 )   (9,595 )   (10,199 )
Non-GAAP R&D Expenses   41,551     41,319     37,237     163,878     139,839  
 
GAAP SG&A Expenses:   26,936     27,056     26,186     108,191     107,037  
Acquisition and Divestiture Related:
Amortization of acquisition related intangibles (1,441 ) (1,441 ) (1,696 ) (5,800 ) (6,649 )
Acquisition related costs (1) (31 ) (294 ) (747 ) (664 ) (4,441 )
Restructuring Related:
Severance and retention costs (41 ) (472 ) (124 ) (631 ) (7,595 )
Facility closure costs (4) (48 ) (114 ) (279 ) (412 ) (290 )
Other:
Compensation expense - deferred compensation plan (6) (68 ) (110 ) (118 ) (244 ) (926 )
Stock-based compensation expense   (1,288 )   (1,307 )   (1,543 )   (5,250 )   (3,713 )
Non-GAAP SG&A Expenses   24,019     23,318     21,679     95,190     83,423  
 
GAAP Interest Income and Other, Net 904 1,352 701 3,697 3,877
Gain on deferred compensation plan securities (6) (507 ) (793 ) (373 ) (1,767 ) (2,870 )
Assets Impairment   -     -     -     -     67  
Non-GAAP Interest Income and Other, Net   397     559     328     1,930     1,074  
 
GAAP Provision for Income Taxes   (20,731 )   31     (950 )   (19,357 )   2,548  
Tax effects of Non-GAAP adjustments (7)   19,710     1,073     729     21,464     (2,443 )
Non-GAAP Provision for Income Taxes   (1,021 )   1,104     (221 )   2,107     105  
 

(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 fiscal 2010.

 

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

 

(4)  Consists of costs associated with the exit from our leased and owned facilities.

 

(5)  Consists of costs incurred in connection with the transition of our wafer fabrication processes from our 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 and tax liability adjustments resulting from conclusion of an IRS audit.

 

(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)
     
April 3, Mar 28,
(In thousands) 2011   2010
 
ASSETS
Current assets:
Cash and cash equivalents $ 104,680 $ 120,526
Short-term investments 194,512 222,663
Accounts receivable, net 81,798 68,957
Inventories 67,041 50,676
Prepaid and other current assets   23,929       25,086  
Total current assets 471,960 487,908
 
Property, plant and equipment, net 67,754 67,988
Goodwill 104,020 103,074
Acquisition-related intangibles assets, net 51,021 65,242
Other assets   32,705       26,733  
TOTAL ASSETS $ 727,460     $ 750,945  
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 36,470 $ 34,717
Accrued compensation and related expenses 28,212 20,738
Deferred income on shipments to distributors 12,853 18,761
Income taxes payable 501 513
Other accrued liabilities   32,609       31,972  
Total current liabilities 110,645 106,701
 
Deferred tax liability 1,513 1,573
Long term income taxes payable 712 21,098
Other long term obligations   15,808       21,833  
Total liabilities 128,678 151,205
 
Stockholders' equity
Common Stock 148 163
Additional paid-in capital 2,343,726 2,310,450
Treasury stock (909,824 ) (802,217 )
Accumulated deficit (837,075 ) (909,702 )
Accumulated other comprehensive income   1,807       1,046  
Total stockholders' equity   598,782     599,740  
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 727,460     $ 750,945  

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

Source: Integrated Device Technology, Inc.

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