August 3, 2015

IDT Reports Q1 Fiscal Year 2016 Financial Results

Q1 FY16 Revenue of $160.9M; up 1.6% Q/Q and 27.4% Y/Y

Q1 FY16 GAAP Diluted EPS (from Continuing Operations) of $0.25

Q1 FY16 Non-GAAP Diluted EPS of $0.31

SAN JOSE, Calif.--(BUSINESS WIRE)-- Integrated Device Technology, Inc. (IDT®) (NASDAQ:IDTI) today announced results for the fiscal first quarter ended June 28, 2015.

"First quarter fiscal 2016 revenue increased by more than 27 percent year-over-year, driven primarily by strength in our High Performance Computing and Wireless Power products," said Greg Waters, president and chief executive officer. "We are delivering on our commitment of superior earnings leverage with growth, and are pleased to announce a non-GAAP operating margin of 29.3 percent for the quarter.

"As we look out to the rest of fiscal 2016, we are confident in our ability to meaningfully outgrow the semiconductor market. Our new product design-win traction is very high, and we are in the early stages of delivering new classes of products in all three of our target market segments" concluded Mr. Waters.

Recent Business Highlights - Computing

  • IDT Wins 2015 EDN China Innovation Award for DDR4 LRDIMM
  • IDT Launches Open High-Performance Analytics and Computing Lab
  • IDT Collaborates with ZMDI on Energy-Efficient Digital Power Technology
  • IDT's RapidIO Solutions Enable Fujitsu's C-RAN Deployments

Recent Business Highlights - Consumer

  • IDT Wireless Charging Technology Featured in LG's New Flagship G4 Smartphone
  • IDT Teams with Blu Wireless to Unite Wireless Charging and WiGig Data Transmission
  • IDT and EPC Collaborate to Integrate Gallium Nitride and Silicon for Faster, Higher Efficiency Semiconductor Devices
  • IDT Wireless Power Transmitter Featured in Samsung Monitor

Recent Business Highlights - Communications

  • IDT Wins 2015 EDN China Innovation Award for IEEE 1588 Time and Frequency Generators
  • IDT Wins Prestigious ACE Award for VersaClock 5 Programmable Clock Generator
  • IDT Introduces VersaClock 5 Programmable Clock Generator with Integrated Crystal
  • IDT Expands VersaClock 5 Family to include Devices with Additional Outputs Supporting PCI Express Timing
  • IDT Adds 3.3 V PCIe Clock Generators to World's Lowest Power PCI Express Timing Family
  • IDT Introduces a Wideband RF Synthesizer/PLL with Industry-Leading Combination of High Performance and Low Power
  • IDT Expands RF Portfolio with New Digital Pre-Distortion Demodulator for Cellular Base Stations
  • IDT Releases 3 New Low-Loss Ultra-Linear RF Variable Attenuator Products Targeting Wideband Communications Systems

The following highlights the Company's financial performance on both a GAAP and supplemental non-GAAP basis. For financial statement purposes, the high speed data converter business is treated as discontinued operations for all periods presented. IDT has excluded results from the high speed data converter business from current and historical non-GAAP results. The Company provides supplemental information regarding its operating performance on a non-GAAP basis that excludes certain gains, losses and charges which occur relatively infrequently and which management considers to be outside our core operating results. 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 from continuing operations is attached to this press release.

  • Revenue from continuing operations for the fiscal first quarter of 2016 was $160.9 million, compared with $158.4 million reported last quarter, and $126.3 million reported in the same period one year ago.
  • GAAP net income from continuing operations for the fiscal first quarter of 2016 was $38.7 million, or $0.25 per diluted share, versus GAAP net income from continuing operations of $40.4 million or $0.26 per diluted share last quarter, and a GAAP net income from continuing operations of $17.1 million or $0.11 per share in the same period one year ago. Fiscal first quarter 2016 GAAP results include $0.8 million expense relating to amortization of intangible assets, $7.9 million in stock-based compensation expense, $0.9 million in severance and retention related charges, $0.2 million in net gain on sale of asset and other, and $0.1 million benefit in related tax effects.
  • Non-GAAP net income for the fiscal first quarter of 2016 was $48.2 million or $0.31 per diluted share, compared with non-GAAP net income of $45.8 million or $0.29 per diluted share last quarter, and non-GAAP net income of $26.7 million or $0.17 per diluted share reported in the same period one year ago.
  • GAAP gross profit from continuing operations for the fiscal first quarter of 2016 was $99.2 million, or 61.7 percent, compared with GAAP gross profit of $98.1 million or 61.9 percent last quarter, and $74.0 million, or 58.6 percent, reported in the same period one year ago. Non-GAAP gross profit for the fiscal first quarter of 2016 was $100.9 million, or 62.7 percent, compared with non-GAAP gross profit of $99.6 million, or 62.9 percent last quarter, and $78.1 million, or 61.9 percent, reported in the same period one year ago.
  • GAAP R&D expense for the fiscal first quarter of 2016 was $33.8 million, compared with GAAP R&D expense of $32.1 million last quarter, and $32.1 million reported in the same period one year ago. Non-GAAP R&D expense for the fiscal first quarter of 2016 was $29.7 million, compared with non-GAAP R&D expense of $29.7 million last quarter, and $28.7 million in the same period one year ago.
  • GAAP SG&A expense for the fiscal first quarter of 2016 was $28.1 million, compared with GAAP SG&A expense of $27.1 million last quarter, and $25.5 million in the same period one year ago. Non-GAAP SG&A expense for the fiscal first quarter of 2016 was $24.0 million, compared with non-GAAP SG&A expense of $23.8 million last quarter, and $22.1 million in the same period one year ago.

Webcast and Conference Call Information

Investors may listen to a live or replay webcast of the Company's quarterly financial conference call at http://ir.idt.com/. The live webcast will begin at 1:30 p.m. Pacific time on August 3, 2015. The webcast replay will be available after 5 p.m. Pacific time on August 3, 2015.

Investors may also listen to the live call at 1:30 p.m. Pacific time on August 3, 2015 by calling (888) 206-4893 (United States); or (913) 312-0398 (International). The access code is 7130025. The conference call replay will be available for one week following the event at (888) 203-1112 (United States); or (719) 457-0820 (International). The access code is 7130025.

About IDT

Integrated Device Technology, Inc. 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, sales facilities and distribution partners 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, YouTube and Google+.

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 29, 2015. 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

To supplement its consolidated financial results presented in accordance with GAAP, IDT uses non-GAAP financial measures which are adjusted from the most directly comparable GAAP financial measures to exclude certain items, as described in detail below. Management believes that these non-GAAP financial measures reflect an additional and useful way of viewing aspects of the Company's operations that, when viewed in conjunction with IDT's GAAP results, provide a more comprehensive understanding of the various factors and trends affecting the Company's business and operations. It should also be noted that IDT's non-GAAP information may be different from the non-GAAP information provided by other companies. Non-GAAP financial measures used by IDT include:

• Cost of revenues;

• Gross profit;

• Research and development expenses;

• Selling, general and administrative expenses;

• Interest income and other;

• Provision for (benefit from) income taxes, continuing operations;

• Operating income;

• Net income from continuing operations;

• Diluted net income per share, continuing operations; and

• Weighted average shares outstanding - diluted

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 acquisition related expense, restructuring and divestiture related costs (gain), share-based compensation expense, results from discontinued operations, stockholder expenses 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 the way management internally analyzes IDT's financial results.

There are limitations in using non-GAAP financial measures because they are not prepared in accordance with GAAP and may be different from non-GAAP financial measures used by other companies. The presentation of non-GAAP financial information is not meant to be considered in isolation or as a substitute for the most directly comparable GAAP financial measures. The non-GAAP financial measures supplement, and should be viewed in conjunction with, GAAP financial measures. Investors should review the reconciliations of the non-GAAP financial measures to their most directly comparable GAAP financial measures as provided in the accompanying press release.

As presented in the "Reconciliation of GAAP to Non-GAAP" tables in the accompanying press release, each of the non-GAAP financial measures excludes one or more of the following items:

Acquisition related. Acquisition-related charges are not factored into management's evaluation of potential acquisitions or IDT's performance after completion of acquisitions, because they are not related to the Company's core operating performance. Adjustments of these items provide investors with a basis to compare IDT's performance to other companies without the variability caused by purchase accounting. Acquisition-related expenses primarily include:

  • Amortization of acquisition related intangibles, which include acquired intangibles such as purchased technology, patents, customer relationships, trademarks, backlog and non-compete agreements.
  • Acquisition related costs such as legal, accounting and other professional or consulting fees directly related to an acquisition.
  • Fair market value adjustment to acquired inventory sold.

Restructuring related. Restructuring charges primarily relate to changes in IDT's infrastructure in efforts to reduce costs and expenses (gains) associated with strategic divestitures and restructuring in force actions. Restructuring charges (gains) are excluded from non-GAAP financial measures because they are not considered core operating activities. Although IDT has engaged in various restructuring activities in the past, each has been a discrete event based on a unique set of business objectives. As such, management believes that it is appropriate to exclude restructuring charges (gains) from IDT's non-GAAP financial measures as it enhances the ability of investors to compare the Company's period-over-period operating results from continuing operations. Restructuring-related charges (gains) primarily include:

  • Severance and retention costs directly related to a restructuring action.
  • Facility closure costs consist of ongoing costs associated with the exit of our leased and owned facilities.
  • Gain on divestiture consists of gains recognized upon the strategic sale of business units.
  • Assets impairments including accelerated depreciation of certain assets no longer in use and impairment charge related to a note receivable and subsequent recoveries.

Other adjustments. These items are excluded from non-GAAP financial measures because they are not related to the core operating activities and on-going future operating performance of IDT. Excluding this data allows investors to better compare IDT's period-over-period performance without such expense, which IDT believes may be useful to the investor community. Other adjustments primarily include:

  • Stock based compensation expense.
  • Compensation expense (benefit) - deferred compensation, consists of gains and losses on marketable equity securities related to our deferred compensation arrangements.
  • Loss (gain) on deferred compensation plan securities represents 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.
  • Life insurance proceeds received, represents proceeds received under corporate owned life insurance under our deferred compensation plan.
  • Tax effects of non-GAAP adjustments. Effective first quarter of fiscal 2016, the Company changed its methodology for reporting non-GAAP taxes to be based on estimated cash tax expense and reserves. The Company forecasts its annual cash tax liability and allocates the tax to each quarter in proportion to earnings for that period. This approach is designed to enhance the ability of investors to understand the impact of the Company's tax expense on its current operations, provide improved modeling accuracy, and substantially reduce fluctuations caused by GAAP to non-GAAP adjustments, which may not reflect actual cash tax expense. Non-GAAP tax amounts for periods prior to March 30, 2015 have not been adjusted to reflect the new methodology.
  • Diluted weighted average shares non-GAAP adjustment, 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.

IDT 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 28,

  Mar. 29,   June 29,
2015 2015 2014
Revenues $ 160,907 $ 158,350 $ 126,302
Cost of revenues   61,673     60,295     52,293  
Gross profit 99,234 98,055 74,009
Operating expenses:
Research and development 33,754 32,071 32,050
Selling, general and administrative   28,143     27,050     25,459  
Total operating expenses   61,897     59,121     57,509  
 
Operating income   37,337     38,934     16,500  
 
Other income, net   1,818     1,966     862  
Income from continuing operations before income taxes 39,155 40,900 17,362
Provision for income taxes   435     517     251  
 
Net income from continuing operations 38,720 40,383 17,111
 
Discontinued operations:
Gain from divestiture - - 16,840
Loss from discontinued operations (547 ) (799 ) (12,153 )
Provision for (benefit from) income taxes   15     318     (45 )
Net income (loss) from discontinued operations (562 ) (1,117 ) 4,732
 
Net income $ 38,158   $ 39,266   $ 21,843  
 
Basic net income per share - continuing operations $ 0.26 $ 0.27 $ 0.11
Basic net income (loss) per share - discontinued operations   -     (0.01 )   0.04  
Basic net income per share $ 0.26   $ 0.26   $ 0.15  
 
Diluted net income per share - continuing operations $ 0.25 $ 0.26 $ 0.11
Diluted net income (loss) per share - discontinued operations   -     (0.01 )   0.03  
Diluted net income per share $ 0.25   $ 0.25   $ 0.14  
 
Weighted average shares:
Basic   148,396     148,326     149,283  
Diluted   153,758     154,111     153,741  
 
 
INTEGRATED DEVICE TECHNOLOGY, INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (a)
(Unaudited)
(In thousands, except per share data)
  Three Months Ended
June 28,   Mar. 29,   June 29,
2015 2015 2014
 
GAAP net income from continuing operations $ 38,720  

 

$ 40,383   $ 17,111  
GAAP diluted net income per share continuing operations $ 0.25  

 

$ 0.26   $ 0.11  
Acquisition related:
Amortization of acquisition related intangibles 832

 

1,001 2,549
Restructuring related:
Severance and retention costs 921

 

- 526
Facility closure costs -

 

- 47
Assets impairment and other 147

 

265 2,302
Other:
Stock-based compensation expense 7,866

 

5,684 4,962
Gain from divestiture (51 ) (168 ) -
Assets impairment and other (325 ) - -
Compensation expense - deferred compensation plan 115

 

213 494
Gain on deferred compensation plan securities (108 )

 

(205 ) (480 )
Non-GAAP tax adjustments   83  

 

  (1,391 )   (859 )
Non-GAAP net income from continuing operations $ 48,200

 

$ 45,782 $ 26,652
GAAP weighted average shares - diluted 153,758

 

154,111 153,741
Non-GAAP adjustment   1,836  

 

  1,558     1,867  
Non-GAAP weighted average shares - diluted   155,594  

 

  155,669     155,608  
Non-GAAP diluted net income per share continuing operations $ 0.31  

 

$ 0.29   $ 0.17  
 
GAAP gross profit $ 99,234  

 

$ 98,055   $ 74,009  
Acquisition related:
Amortization of acquisition related intangibles 617

 

625 1,686
Restructuring related:
Severance and retention costs 182

 

- 23
Assets impairment and other 147

 

220 1,935
Other:
Compensation expense - deferred compensation plan 42

 

78 147
Stock-based compensation expense   682  

 

  589     319  
Non-GAAP gross profit $ 100,904  

 

$ 99,567   $ 78,119  
 
GAAP R&D expenses: $ 33,754  

 

$ 32,071   $ 32,050  
Restructuring related:
Severance and retention costs (347 )

 

- (240 )
Assets impairment and other - (45 ) (367 )
Other:
Compensation expense - deferred compensation plan (45 )

 

(83 ) (240 )
Stock-based compensation expense   (3,632 )

 

  (2,266 )   (2,521 )
Non-GAAP R&D expenses $ 29,730  

 

$ 29,677   $ 28,682  
 
GAAP SG&A expenses: $ 28,143  

 

$ 27,050   $ 25,459  
Acquisition related:
Amortization of acquisition related intangibles (215 )

 

(376 ) (863 )
Restructuring related:
Severance and retention costs (392 )

 

- (263 )
Facility closure costs -

 

- (47 )
Other:
Compensation expense - deferred compensation plan (28 )

 

(52 ) (107 )
Stock-based compensation expense   (3,552 )

 

  (2,829 )   (2,122 )
Non-GAAP SG&A expenses $ 23,956  

 

$ 23,793   $ 22,057  
 
GAAP interest income and other, net $ 1,818

 

$ 1,966 $ 862
Gain from divestiture (51 ) (168 ) -
Gain on deferred compensation plan securities (108 )

 

(205 ) (480 )
Assets impairment and other   (325 )

 

  -     -  
Non-GAAP interest income and other, net $ 1,334  

 

$ 1,593   $ 382  
 
GAAP provision for income taxes - continuing operations $ 435

 

$ 517 $ 251
Non-GAAP tax adjustments   (83 )

 

  1,391     859  
Non-GAAP provision for income taxes - continuing operations $ 352  

 

$ 1,908   $ 1,110  
 
(a) Refer to the accompanying "Notes to Non-GAAP Financial Measures" for a detailed discussion of management's use of non-GAAP financial measures.
 
 
INTEGRATED DEVICE TECHNOLOGY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
   
June 28, Mar. 29,
(In thousands) 2015 2015
 
ASSETS
Current assets:
Cash and cash equivalents $ 101,141 $ 116,945
Short-term investments 439,859 438,115
Accounts receivable, net 70,395 63,618
Inventories 42,703 45,410
Prepaid and other current assets   15,647   16,041
Total current assets 669,745 680,129
 
Property, plant and equipment, net 64,421 65,508
Goodwill 135,644 135,644
Acquisition-related intangibles 4,703 5,535
Other assets   26,681   26,843
TOTAL ASSETS $ 901,194 $ 913,659
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 21,752 $ 28,006
Accrued compensation and related expenses 23,809 43,649
Deferred income on shipments to distributors 10,380 15,694
Deferred taxes liabilities 1,491 1,401
Other accrued liabilities   11,003   17,582
Total current liabilities 68,435 106,332
 
Deferred tax liabilities 1,114 1,121
Long term income taxes payable 286 347
Other long-term obligations   20,764   17,605
Total liabilities 90,599 125,405
 
Stockholders' equity   810,595   788,254
 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 901,194 $ 913,659
 

Financial Contact:
Suzanne Schmidt, 415-217-4962
IDT Investor Relations
suzanne@blueshirtgroup.com
or
Press Contact:
Graham Robertson, 408-284-2644
IDT Worldwide Marketing
graham.robertson@idt.com

Source: Integrated Device Technology, Inc.

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