IDT Reports Strong Sequential Revenue and Profit Growth
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IDT Reports Strong Sequential Revenue and Profit Growth

SAN JOSE, Calif. — (BUSINESS WIRE) — October 27, 2009 — IDT® (Integrated Device Technology, Inc.)(NASDAQ: IDTI), a leading provider of essential mixed signal semiconductor solutions that enrich the digital media experience, today announced results for the fiscal second quarter ended September 27, 2009.

“Revenue, gross margin and EPS for our fiscal second quarter 2010 were all above the high end of our prior projections provided on July 28, 2009,” said Dr. Ted Tewksbury, president and CEO of IDT. “We achieved a 20 percent sequential increase in revenue driven by strong demand across all three of our end markets – consumer, computing, and communications. Solid revenue contributions from core businesses, like PC clocks and gaming, were augmented by significant revenue increases in new growth areas like video and serial switching. Non-GAAP gross margin increased by 4 percent sequentially to over 50 percent, driven by higher revenue, improved product mix and increased fab utilization. These improvements, combined with accelerated synergies from our recent Tundra Semiconductor acquisition, enabled us to deliver non-GAAP EPS of $0.07. Overall, this quarter demonstrated that IDT’s strategy of expanding our core strengths while layering on new growth segments is producing positive results and considerable operating leverage.”

Recent Highlights

Recently, IDT announced:

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 in accordance with GAAP 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.

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 October 27, 2009. The webcast replay will be available after 5:00 p.m. Pacific time on October 27, 2009.

Investors can also listen to the live call at 1:30 p.m. Pacific time on October 27, 2009 by calling (800) 230-1085 or (612) 234-9960. The conference call replay will be available after 5:00 p.m. Pacific time on October 27, 2009 through 11:59 p.m. Pacific time on November 3, 2009 at (800) 475-6701 or (320) 365-3844. The access code is 117387.

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 solve customer problems. 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.

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 29, 2009. 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. The Company has reconciled such 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 current accounting standards, 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, Hollywood Quality Video, HQV, PanelPort, Tundra, Vida, 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   Six Months Ended
Sept 27, June 28, Sept 28, Sept 27, Sept. 28,
  2009     2009     2008     2009     2008  
 
Revenues $ 139,504 $ 115,954 $ 200,541 255,458 388,749
 
Cost of revenues   88,373     68,789     113,388     157,162     217,137  
 
Gross profit   51,131     47,165     87,153     98,296     171,612  
 
Operating expenses:
 
Research and development 41,455 36,315 41,532 77,770 85,151
 
Selling, general and administrative   30,662     25,435     32,211     56,097     65,176  
 
Total operating expenses   72,117     61,750     73,743     133,867     150,327  
 
Operating income (loss) (20,986 ) (14,585 ) 13,410 (35,571 ) 21,285
 
Gain on divestiture 82,747 - - 82,747 -
 
Interest income and other, net 1,199 1,425 384 2,624 1,849
 
Interest expense   (11 )   (19 )   (15 )   (30 )   (33 )
 
Income (loss) before income taxes 62,949 (13,179 ) 13,779 49,770 23,101
 
Provision for income taxes   2,409     942     2,104     3,351     2,272  
 
Net income (loss) $ 60,540   $ (14,121 ) $ 11,675     46,419     20,829  
 
 
Net income (loss) per share:
 
Basic $ 0.37 $ (0.09 ) $ 0.07 $ 0.28 $ 0.12
 
Diluted $ 0.36 $ (0.09 ) $ 0.07 $ 0.28 $ 0.12
 
Weighted average shares:
 
Basic 165,591 165,430 169,570 165,511 170,325
 
Diluted 166,075 165,430 169,752 165,853 170,586
INTEGRATED DEVICE TECHNOLOGY, INC.
RECONCILIATION OF GAAP TO NON-GAAP
(Unaudited)
(In thousands)          
    Three Months Ended   Six Months Ended
Sept 27, June 28, Sept. 28, Sept. 27, Sept. 28,
  2009     2009     2008     2009     2008  
 
 
GAAP Net Income (Loss) $ 60,540   $ (14,121 ) $ 11,675   $ 46,419   $ 20,829  
 
GAAP Diluted Income (Loss) Per Share $ 0.36   $ (0.09 ) $ 0.07   $ 0.28   $ 0.12  
Acquisition Related:
 
Amortization of acquisition related intangibles 6,109 5,219 20,592 11,328 41,452
 
Acquisition related costs (1) 353 3,593 (3 ) 3,946 (6 )
 
Gain on divestiture of NWD assets (82,747 ) - - (82,747 ) -
 
Assets impairment - 2,002 - 2,002 -
 
Inventory FMV amortization 7,634 - - 7,634 -
 
Restructuring Related:
 
Severance and retention costs 14,021 1,479 471 15,500 1,305
 
Facility closure costs (2) 13 23 19 36 95
 
Fabrication production transfer costs 322 - - 322 -
 
Other:
 
Compensation expense (benefit)—deferred compensation plan (3) 1,112 889 (751 ) 2,001 (715 )
 
Loss (gain) on deferred compensation plan securities (3) (1,111 ) (876 ) 711 (1,987 ) 689
 
Stock-based compensation expense 3,919 4,260 8,642 8,179 16,771
 
Tax effects of Non-GAAP adjustments (4)   2,028     1,008     1,910     3,036     2,034  
 
Non-GAAP Net Income $ 12,193   $ 3,476   $ 43,266   $ 15,669   $ 82,454  
 
Non-GAAP Diluted Earnings Per Share $ 0.07   $ 0.02   $ 0.25   $ 0.09   $ 0.48  
 
Weighted average shares:
 
Basic 165,591 165,430 169,570 165,511 170,325
 
Diluted 166,075 165,575 169,752 165,853 170,586
 
 
 
GAAP gross profit   51,131     47,165     87,153     98,296     171,612  
 
Acquisition Related:
 
Amortization of acquisition related intangibles 4,262 3,920 14,570 8,182 29,341
 
Assets impairment - 2,002 - 2,002 -
 
Inventory FMV amortization 7,634 - - 7,634 -
 
Fabrication production transfer costs 322 - - 322 -
 
Restructuring Related:
 
Severance and retention costs 5,708 55 - 5,763 656
 
Facility closure costs (2) 4 8 3 12 28
 
Other:
 
Compensation expense (benefit)—deferred compensation plan 156 124 (105 ) 280 (99 )
 
Stock-based compensation expense   995     626     1,184     1,621     1,970  
 
Non-GAAP gross profit   70,212     53,900     102,805     124,112     203,508  
 
 
 
GAAP R&D Expenses:   41,455     36,315     41,532     77,770     85,151  
 
Acquisition Related:
 
Amortization of acquisition related intangibles - - (19 ) - (38 )
 
Acquisition related costs (1) - 2 2 2 4
 
Restructuring Related:
 
Severance and retention costs (2,057 ) (930 ) (453 ) (2,987 ) (460 )
 
Facility closure costs (2) (5 ) (11 ) (16 ) (16 ) (53 )
 
Other:
 
Compensation expense (benefit)—deferred compensation plan (600 ) (480 ) 406 (1,080 ) 383
 
Stock-based compensation expense   (2,930 )   (2,745 )   (5,149 )   (5,675 )   (10,301 )
 
Non-GAAP R&D Expenses   35,863     32,151     36,303     68,014     74,686  
 
 
 
GAAP SG&A Expenses:   30,662     25,435     32,211     56,097     65,176  
 
Acquisition Related:
 
Amortization of acquisition related intangibles (1,847 ) (1,299 ) (6,003 ) (3,146 ) (12,073 )
 
Acquisition related costs (1) (353 ) (3,595 ) 1 (3,948 ) 2
 
Restructuring Related:
 
Severance and retention costs (6,256 ) (494 ) (18 ) (6,750 ) (189 )
 
Facility closure costs (2) (4 ) (4 ) - (8 ) (14 )
 
Other:
 
Compensation expense (benefit)—deferred compensation plan (356 ) (285 ) 240 (641 ) 233
 
Stock-based compensation expense   6     (889 )   (2,309 )   (883 )   (4,500 )
 
Non-GAAP SG&A Expenses   21,852     18,869     24,122     40,721     48,635  
 
 
 
GAAP Interest income and other, net   1,188     1,406     369     2,594     1,816  
 
Loss (gain) on deferred compensation plan securities   (1,111 )   (876 )   711     (1,987 )   689  
 
Non-GAAP Interest income and other, net   77     530     1,080     607     2,505  
 
 
 
GAAP Provision for Income Taxes   2,409     942     2,104     3,351     2,272  
 
Tax effects of Non-GAAP adjustments (4)   (2,028 )   (1,008 )   (1,910 )   (3,036 )   (2,034 )
 
Non-GAAP Provision for Income Taxes   381     (66 )   194     315     238  
 

(1)  Consists of costs incurred in connection with merger and acquisition-related activities, including legal and accounting fees.  Also includes costs associated with our merger with ICS and Tundra, such as additional depreciation resulting from purchase accounting and costs associated with the exit of previously leased facilities.

 

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

 

(3) 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.

 

(4) Consists of the tax effects of non-GAAP adjustments related to acquisitions and stock-based compensation expense.

INTEGRATED DEVICE TECHNOLOGY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
   
Sept 27, March 29,
(In thousands)     2009     2009
 
 
ASSETS
 
Current assets:
 
Cash and cash equivalents $ 176,460 $ 136,036
 
Short-term investments 182,401 160,037
 
Accounts receivable, net 59,897 54,894
 
Inventories 64,634 69,722
 
Deferred Taxes 1,696 1,696
 
Prepaid and other current assets   21,674   19,881
 
Total current assets 506,762 442,266
 
Property, plant and equipment, net 72,287 71,561
 
Goodwill 101,225 89,404
 
Acquisition-related intangibles 65,201 50,509
 
Other assets   26,495   24,627
 
TOTAL ASSETS $ 771,970 $ 678,367
 
 
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
Current liabilities:
 
Accounts payable $ 35,988 $ 25,837
 
Accrued compensation and related expenses 19,251 18,820
 
Deferred income on shipments to distributors 17,010 16,538
 
Income taxes payable 3,471 457
 
Other accrued liabilities   30,336   21,206
 
Total current liabilities 106,056 82,858
 
 
Deferred tax liabilities 3,381 3,220
 
Long term income taxes payable 21,011 20,907
 
Other long term obligations   25,794   14,314
 
Total liabilities 156,242 121,299
 
 
Stockholders' equity   615,728   557,068
 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 771,970 $ 678,367



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