Integrated Device Technology
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Jan 23,2003

IDT Announces Results for Third Quarter of Fiscal 2003

IDT Announces Results for Third Quarter of Fiscal 2003

SANTA CLARA, Calif.--(BUSINESS WIRE)--Jan. 23, 2003--IDT™ (Integrated Device Technology, Inc.)(Nasdaq:IDTI), a leading communications IC company, today announced results for the quarter ended December 29, 2002, its third quarter of fiscal 2003. Revenues for the third quarter were $79.0 million, a decrease of 14 percent compared to the second quarter of fiscal 2003 and a decrease of 1 percent compared to the quarter ended December 30, 2001. On a pro-forma basis, the net loss for the third fiscal quarter was $20.6 million ($0.20 loss per share), compared to net income of $1.0 million ($0.01 per diluted share) in the second quarter of fiscal 2003 and a net loss of $11.9 million ($0.11 loss per share) for the quarter one year ago.

Including certain costs, charges and gains in accordance with GAAP, the Company lost $26.3 million in the third quarter of fiscal 2003 ($0.25 loss per share) compared to a loss of $4.9 million in the second quarter of fiscal 2003 ($0.05 loss per share). One year ago, on a GAAP basis, the Company earned $214,000 ($0.00 per diluted share) for the third quarter of fiscal 2002. Further information, including a detailed reconciliation of pro-forma and GAAP results, is provided in the financial tables of this release.

"We experienced a difficult third fiscal quarter with declining revenue and a substantial reduction in inventories," said Greg Lang, IDT president and CEO. "While the business climate remains challenging, we believe that working down our inventory levels will put us in better financial shape as we enter fiscal 2004. Additionally, our strong balance sheet enables us to continue to invest in technology and product development, which has resulted in new design-win momentum."

Q3FY03 Highlights:

"We introduced new offerings in most of our product segments, including a new integrated communications processor that enhances overall system bandwidth in Enterprise and access markets, and new software development tools to accompany our growing line of classification and content inspection processors," said Thomas Brenner, vice president of worldwide marketing for IDT. "We continue to make strides in developing innovative products that address our customers' need for more complete intelligent packet-processing solutions."

Additional Highlights:

  • The IDT 128Kx72 (256Kx36) full-ternary network search engine was named one of the EDN Top 100 Products for 2002 and has won several designs at key communications customers. In its special report published in the December 12, 2002 issue, EDN praised the IDT device for "performing as many as 100 million database look-ups/sec" and supporting "searches as wide as 576 bits."

  • The Company is shipping the latest version of its complete classification processing software development kit (SDK) for the PAX.port family of classification and content inspection processors. PAX.works 3.4 is used to prototype, test, and debug complex classification, content inspection and regular expression matching that enables intelligent application management in next-generation networking equipment. PAX.works software can be used to program the IDT family of PAX.port classification processors, thereby reducing time to market development cycles for new equipment designs. IDT is also now demonstrating OC-48 classification on its PAX.ware 2500 evaluation system for its PAX.port 2500 classification and content inspection processor. The evaluation system allows next-generation system designers to evaluate full, wire-speed classification processing in network processing architectures featuring the PAX.port 2500 classification processor.

  • In November, IDT expanded its family of newly branded Interprise™ processors with the introduction of the RC32438 integrated communications processor. Building on the company's position as the leading provider of integrated processors for managed Layer-2 Ethernet switches, the new device delivers up to 250 MHz in performance and incorporates a DDR memory controller, a 32-bit version

  • 2.2 PCI controller and two on-chip Ethernet interfaces to address the bandwidth-demanding requirements of communications applications within the Enterprise and access market segments, including managed Layer-2 and Layer-3 switches, gateways, wireless access points and VPN equipment.

  • IDT strengthened its position as a leading integrated processor supplier for the growing Asia Pacific communications infrastructure market with key design wins in China and Taiwan. Lite-On has selected the IDT RC32332 and RC32334 integrated communications processors for several of their managed local area network (LAN) switches and wireless routers for the Enterprise market.

  • The Company announced its TeraClock™ family of zero delay buffers and programmable skew devices that provide the industry's broadest range of translation capabilities between I/O standards as well as pin-to-pin compatibility for ease of migration between the zero delay buffer and programmable skew devices. The IDT TeraClock devices address design challenges by supporting the high-speed I/O standards required in next-generation communications applications such as network routers, wireless 3G base stations and storage area networks (SANs).

  • IDT introduced a portfolio of CODEC devices with the addition of a fully integrated 3.3-volt quad CODEC and ringing SLIC chip set. As the Company's first complete analog line-card solution, these devices provide a four-channel function for analog line termination, supervision, filtering and pulse code modulation (PCM) encoding of POTS subscriber lines, making them ideal for VoX systems in small-to-medium-sized enterprises and customer premises equipment (CPE). The IDT CODEC/SLIC chip set offers a glue-less interface between the CODEC and SLIC devices, minimizing the need for external components, resulting in conservation of board space and a reduction in overall system costs.

Investor Information

Investors can listen to a live or on-demand replay Webcast of the IDT quarterly financial conference call at www.idt.com. The live call begins at 1:30 p.m. PST on January 23, 2003. A taped replay of the Company's quarter-end conference call will also be available by calling 800/475-6701 (pass code is 670718) beginning at 5 p.m. PST on January 23, 2003 and will be accessible until 9 p.m. PST on January 30, 2003.

IDT stock is traded on the Nasdaq Stock Market® under the symbol "IDTI." The company is included in the S&P 1000, which is a combination of the S&P MidCap 400 and S&P SmallCap 600 Indices. The investor hotline is 408/654-6420.

View Tables(PDF)

About IDT

IDT enhances the global network with semiconductor solutions for communications companies that lead innovation and drive convergence in voice, data and wireless networks. IDT is focused on enhancing system bandwidth with communications-specific products including network search engines, classification and content inspection processors and integrated communications processors. The portfolio is also comprised of products optimized for communications applications, including telecom products, FIFOs, multi-ports, and clock management products. In addition, the product mix includes high-performance digital logic and high-speed SRAMs to meet the requirements of leading communications companies.

Headquartered in Santa Clara, Calif., the company employs approximately 3,200 people worldwide and has a wafer manufacturing facility in Oregon, and test and assembly facilities in the Philippines and Malaysia. Additional information about IDT is easily accessible at www.idt.com.

Forward-looking statements in this release involve a number of risks and uncertainties including, but not limited to, product demand, manufacturing capacity and costs, competition, pricing, patent and other intellectual property rights of third parties, timely development and supply of new products and manufacturing processes, availability of capital, cash flow and other risk factors detailed in the Company's Securities and Exchange Commission filings. Actual results may differ materially from the Company's projections.

Note to Editors: IDT, Interprise and TeraClock are trademarks and the IDT logo is a registered trademark 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
-------------------------------------------------- -------------------
                     Dec. 29,  Sep. 29,  Dec. 30,  Dec. 29,  Dec. 30,
                       2002      2002      2001      2002      2001
                     ----------------------------- --------- ---------
Revenues             $ 79,010  $ 92,252  $ 80,171  $263,074  $293,196
Cost of revenues       59,826    49,246    53,555   165,800   185,678
Restructuring
 charges, asset
 impairment and
 other                  1,010        --    18,571     1,285    20,872
                      --------  --------  --------  --------  --------
Gross profit           18,174    43,006     8,045    95,989    86,646
                      --------  --------  --------  --------  --------
Operating expenses:
  Research and
   development         30,126    29,384    31,542    89,751    97,184
  Selling, general
   and administrative  21,827    19,862    20,176    62,115    65,280
  Acquired in-process 
   research and 
   development          2,670        --        --     2,670    16,000
  Amortization of
   intangibles            161       156     1,681       473     5,043
                      --------  --------  --------  --------  --------
Total operating
 expenses              54,784    49,402    53,399   155,009   183,507
                      --------  --------  --------  --------  --------
Operating loss        (36,610)   (6,396)  (45,354)  (59,020)  (96,861)
Interest expense         (143)     (129)     (153)     (403)   (1,035)
Loss on equity
 investments               --    (6,557)   36,160    (6,557)   36,160
Interest income and
 other, net             4,006     5,231     7,136    15,160    32,285
                      --------  --------  --------  --------  --------
Loss before 
 income taxes         (32,747)   (7,851)   (2,211)  (50,820)  (29,451)
Benefit for 
 income taxes          (6,424)   (2,969)   (2,425)  (12,025)   (3,239)
                      --------  --------  --------  --------  --------
Net income (loss)    $(26,323) $ (4,882) $    214  $(38,795) $(26,212)
                      ========  ========  ========  ========  ========

Net income (loss)
 per share:
Basic                $  (0.25) $  (0.05) $   0.00  $  (0.37) $  (0.25)
Diluted              $  (0.25) $  (0.05) $   0.00  $  (0.37) $  (0.25)
Weighted average
 shares:
Basic                 103,271   103,091   104,111   103,531   104,630
Diluted               103,271   103,091   107,680   103,531   104,630


                  INTEGRATED DEVICE TECHNOLOGY, INC.
                         PRO FORMA ADJUSTMENTS
                              (Unaudited)

 (In thousands)
                           Three Months Ended       Nine Months Ended
-------------------------------------------------- -------------------
                      Dec. 29,  Sep. 29, Dec. 30,  Dec. 29,  Dec. 30,
                        2002      2002     2001      2002      2001
                      --------- -------- --------- --------- ---------
Net income (loss)     $(26,323) $(4,882) $    214  $(38,795) $(26,212)
                       --------  -------  --------  --------  --------
Special items:
Cost of goods sold:
 Restructuring 
  charges (1)            1,010       --     1,138     1,285     3,439
 Asset impairment (1)       --       --    17,433        --    17,433
 Other (3)                 339      619        --     4,320        --
 Amortization of
  acquisition-related
  charges (2)              909      786       786     2,481     2,358

Operating expenses:
 Acquired IPR&D (2)      2,670       --        --     2,670    16,000
 Other (3)                   8      108        --       376        --
 Restructuring
  charges (1)              868       --       902     1,086     1,117
 Amortization of
  goodwill (2)              --       --     1,500        --     4,500
 Other acquisition-
  related costs (2)      1,248      976     1,490     3,200     4,087

Losses (gains) on
 equity investments (4)     --    6,557   (35,860)    6,557   (35,860)
Other income (5)            --       --        --        --    (5,085)

Tax effects             (1,285)  (3,208)      539    (6,256)    1,053
                       --------  -------  --------  --------  --------
Total special items      5,767    5,838   (12,072)   15,719     9,042
                       --------  -------  --------  --------  --------
Pro forma net income
 (loss)               $(20,556) $   956  $(11,858) $(23,076) $(17,170)
                       ========  =======  ========  ========  ========

(1) Consists of costs, primarily severance, of restructuring actions
    taken in Q1 2002, Q3 2002, Q1 2003 and Q3 2003. We also recorded 
    an asset impairment charge related to our Salinas, Calif. wafer
    fabrication plant in Q3 2002.
(2) Costs relate to our acquisitions of Newave and Solidum in April
    2001 and October 2002, respectively. Newave-related costs include 
    an IPR&D charge and amortization of contingent compensation, 
    stock-based compensation and intangible assets. Solidum-related 
    costs include an IPR&D charge and amortization of intangible 
    assets.
(3) Consists of costs related to the June 2002 closure of our Salinas
    plant, including $3.0 million in retention bonuses for Q1 2003.
(4) The item for Q2 2003 consists of an other-than-temporary
    impairment charge related to our equity investment in 
    PMC-Sierra Inc. (PMC). We sold all of our holdings in Monolithic 
    Systems Technology (MoSys) in Q3 2002 and recorded a pretax gain 
    of $35.7 million. We also sold a portion of our holdings in PMC in
    Q3 2002 and recorded a pretax gain of $0.5 million.
(5) In Q2 2002, we exercised an option to purchase land. The land was
    immediately sold at a pretax gain of $5.1 million.


                  INTEGRATED DEVICE TECHNOLOGY, INC.
                  PRO FORMA STATEMENTS OF OPERATIONS
                             (Unaudited)

(In thousands,
 except per share         
 data)                    Three Months Ended        Nine Months Ended
-------------------------------------------------- -------------------
                     Dec. 29,  Sep. 29,  Dec. 30,  Dec. 29,  Dec. 30,
                       2002      2002      2001      2002      2001
                     ----------------------------- --------- ---------
Revenues             $ 79,010  $ 92,252  $ 80,171  $263,074  $293,196
Cost of revenues       58,578    47,841    52,769   158,999   183,320
                      --------  --------  --------  --------  --------
Gross profit           20,432    44,411    27,402   104,075   109,876
                      --------  --------  --------  --------  --------
Operating expenses:
 Research and
  development          28,839    28,456    29,842    86,456    93,305
 Selling, general
  and administrative   21,151    19,862    19,665    61,221    64,498
                      --------  --------  --------  --------  --------
Total operating
 expenses              49,990    48,318    49,507   147,677   157,803
                      --------  --------  --------  --------  --------
Operating loss        (29,558)   (3,907)  (22,105)  (43,602)  (47,927)
Interest expense         (143)     (129)     (153)     (403)   (1,035)
Interest income and
 other, net             4,006     5,231     7,436    15,160    27,500
                      --------  --------  --------  --------  --------
Income (loss) before
 income taxes         (25,695)    1,195   (14,822)  (28,845)  (21,462)
Provision (benefit)
 for income taxes      (5,139)      239    (2,964)   (5,769)   (4,292)
                      --------  --------  --------  --------  --------
Net income (loss)    $(20,556) $    956  $(11,858) $(23,076) $(17,170)
                      ========  ========  ========  ========  ========

Net income (loss)
 per share:
Diluted              $  (0.20) $   0.01  $  (0.11) $  (0.22) $  (0.16)
Weighted average
 shares:
Diluted               103,271   104,508   104,111   103,531   104,630

Our pro forma results exclude acquisition-related charges and unusual
or infrequent expenses and benefits that are not directly related to
our ongoing operations. We believe that these pro forma results
provide useful information; however, our presentation of pro forma
results is not in accordance with GAAP and may not be comparable to
pro forma information provided by other companies. Pro forma
information should be considered a supplement to, and not a substitute
for, financial statements prepared in accordance with GAAP.


                  INTEGRATED DEVICE TECHNOLOGY, INC.
                 CONDENSED CONSOLIDATED BALANCE SHEETS
                              (Unaudited)

                                                Dec. 29,    Mar. 31,
(In thousands)                                    2002        2002
----------------------------------------------------------------------

ASSETS
Current assets:
Cash and cash equivalents                      $  169,299  $  256,172
Short-term investments                            401,880     418,228
Accounts receivable, net                           38,786      40,067
Inventories                                        56,641      78,247
Deferred tax assets                                72,492      74,874
Prepayments and other current assets               32,801      19,787
                                                ----------  ----------
Total current assets                              771,899     887,375

Property, plant and equipment, net                239,426     221,499
Goodwill and other intangibles                     61,836      57,281
Other assets                                       39,431      59,664
                                                ----------  ----------
TOTAL ASSETS                                   $1,112,592  $1,225,819
                                                ==========  ==========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable                               $   17,334  $   18,342
Accrued compensation and related expenses          14,214      14,068
Deferred income on shipments to distributors       20,096      36,443
Income taxes payable                               10,390      21,863
Other accrued liabilities                          21,143      29,173
                                                ----------  ----------
Total current liabilities                          83,177     119,889

Other liabilities                                  36,136      51,221
                                                ----------  ----------
Total liabilities                                 119,313     171,110

Stockholders' equity                              993,279   1,054,709
                                                ----------  ----------
TOTAL LIABILITIES AND STOCKHOLDERS'
   EQUITY                                      $1,112,592  $1,225,819
                                                ==========  ==========

--30--kc/sf*

CONTACT: Integrated Device Technology, Inc.
Diana Pailthorpe, 408/492-8210 (Corporate Communications)
diana.pailthorpe@idt.com
Investor Relations, 408/654-6420
ir@idt.com




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