Integrated Device Technology, Inc. (IDT® or the Company)
(NASDAQ: IDTI), the Analog and Digital Company™ delivering
essential mixed-signal semiconductor solutions, today announced
results for the fiscal fourth quarter and year ended March 31,
2013.
“We delivered Q4 results that were in line with our prior
projections,” said Dr. Ted Tewksbury, president and CEO of IDT.
“Revenue from new products was up 6 percent sequentially which was
offset by weakness in our core and base businesses. Despite the
sequential decline in total revenue, gross margins were slightly
higher on better product mix, we were able to maintain non-GAAP
profitability as expected, and we generated positive cash flow from
operations during the quarter.”
“Despite a challenging fiscal year 2013, revenue from new
product categories grew 56 percent year-over-year and represented
18 percent of total revenue, in line with our projections from our
analyst day a year ago. This highlights the success we are seeing
in these new areas but that growth was offset by declines in our
base and core businesses, reflecting a difficult demand environment
across all of our end markets. We also drove gross margins to
10-year highs in fiscal 2013 by adopting a fabless model and
focusing on higher margin products. As we enter fiscal 2014, we
believe that the continued momentum of new product adoption,
recovery in our core and base businesses, continued strength in
gross margins and planned reductions in operating expenses will
enable us to expand our operating margins throughout the year.”
Recent Highlights
IDT recently announced:
- The divestiture of its smart meter
business to Atmel in an all-cash transaction
- The industry’s first dual-mode wireless
power receiver IC compatible with both WPC and PMA standards. The
innovative solution eliminates compatibility barriers between
wireless power transmission standards, allowing OEMs to address
multiple standards with a single device
- The industry’s first intelligent,
scalable power management solution with distributed output current
capability to meet varying SoC power requirements and overcome
thermal limitations
- It won the Prestigious 2013 China ACE
Award and China Electronic Market Magazine’s Editor’s Choice Award
for its wireless power solution
- The industry’s first low-overshoot RF
digital step attenuator with integrated coupling capacitors. This
drop-in Glitch-Free™ DSA integrates DC-blocking capacitors to
simplify the bill-of-materials and maximize performance in base
station and industrial applications
- Data compression IP offering industry’s
highest performance for 3G and 4G wireless infrastructure
applications. The patent-protected compression IP reduces system
cost by enabling the use of low cost fiber to connect remote radio
units to the baseband unit in wireless infrastructure
- The world’s lowest jitter MEMS
oscillators with integrated frequency margining capability. The
MEMS oscillators offer only 100 femtoseconds of typical phase
jitter and adaptable output frequency to reduce bit error rates in
high-performance 10GbE and networking applications
The following highlights the Company’s financial performance on
both a GAAP and supplemental non-GAAP basis. 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 for the fiscal fourth quarter
of 2013 was $108.5 million, compared with $119.1 million reported
in the same period one year ago. Revenue for fiscal year 2013 was
$487.2 million, compared with $526.7 million in fiscal year
2012.
- GAAP net loss from continuing
operations for the fiscal fourth quarter of 2013 was $10.6 million,
or a loss of $0.07 per diluted share, versus GAAP net income from
continuing operations of $17.4 million or $0.12 per diluted share
in the same period one year ago. Fiscal fourth quarter 2013 GAAP
results include $6.4 million in asset impairments and other
adjustments, $4.0 million in stock-based compensation, $0.2 million
in acquisition and restructuring related charges and $1.5 million
from related tax effects.
- Non-GAAP net income from continuing
operations for the fiscal fourth quarter of 2013 was $1.5 million
or $0.01 per diluted share, compared with non-GAAP net income from
continuing operations of $7.1 million or $0.05 per diluted share
reported in the same period one year ago. Non-GAAP net income from
continuing operations for fiscal year 2013 was $31.3 million,
compared with $56.6 million in fiscal year 2012.
- GAAP gross profit for the fiscal fourth
quarter of 2013 was $59.5 million, or 54.8 percent, compared with
GAAP gross profit of $63.6 million, or 53.4 percent, reported in
the same period one year ago. Non-GAAP gross profit for the fiscal
fourth quarter of 2013 was $63.2 million, or 58.2 percent, compared
with non-GAAP gross profit of $68.7 million, or 57.7 percent,
reported in the same period one year ago.
- GAAP R&D expense for the fiscal
fourth quarter of 2013 was $45.7 million, compared with GAAP
R&D expense of $41.3 million reported in the same period one
year ago. Non-GAAP R&D expense for the fiscal fourth quarter of
2013 was $38.5 million, which was flat with non-GAAP R&D of
$38.5 million in the same period one year ago.
- GAAP SG&A expense for the fiscal
fourth quarter of 2013 was $29.1 million, compared with GAAP
SG&A expense of $26.4 million in the same period one year ago.
Non-GAAP SG&A expense for the fiscal fourth quarter of 2013 was
$22.5 million, compared with non-GAAP SG&A expense of $22.4
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://ir.idt.com/. The live webcast will begin at 1:30 p.m.
Pacific time on April 29, 2013. The webcast replay will be
available after 5 p.m. Pacific time on April 29, 2013.
Investors can also listen to the live call at 1:30 p.m. Pacific
time on April 29, 2013 by calling (800) 230-1092 or (612) 234-9960.
The conference call replay will be available after 5 p.m. Pacific
time on April 29, 2013 through 11:59 p.m. Pacific time on May 6,
2013 at (800) 475-6701 or (320) 365-3844. The access code is
287469.
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,
sales facilities and distribution partners throughout the world,
with direct purchase services through IDT Direct™. 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 April 1, 2012. 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:
• Gross profit;
• Research and development expenses;
• Selling, general and administrative expenses;
• Interest income and other;
• Provision (benefit) for income taxes, continuing
operations
• Operating income (loss);
• Net income (loss) from continuing operations;
• Diluted net income (loss) 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.
- Other acquisition related costs which
consists of an accrued deferred closing date fee associated with
the acquisition of NXP’s high-speed data converter assets.
- 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 of business units.
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.
- Fabrication production transfer costs
consists of expenses incurred in connection with the transition of
our wafer fabrication processes in our Oregon facility to
TSMC.
- Gain on sale of wafer fabrication
facility.
- Gain on divestiture consists of gains
recognized upon the strategic sale of business units.
- Assets impairments consists of an
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:
- Asset impairments, consists of the
accelerated depreciation of certain design tools no longer in use
and the release of capitalized financing fees associated with a
financing facility which expired unused.
- Other-than-temporary impairment loss on
investments consists of fair value write-downs of certain private
equity investments.
- Stock based compensation expense.
- Expenses related to stockholder
activities reflect advisory fees related to inquiries of Starboard
Value LP.
- 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.
- 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 Twelve Months Ended Mar. 31, Dec.
30, Apr. 1, Mar. 31, Apr. 1,
2013 2012 2012
2013 2012 Revenues
$ 108,527 $ 115,147 $ 119,116 $ 487,236 $ 526,696 Cost of revenues
49,014 52,200 55,563
217,636 246,190 Gross profit 59,513
62,947 63,553 269,600 280,506 Operating expenses: Research and
development 45,732 40,170 41,340 169,833 158,749 Selling, general
and administrative 29,133 27,389
26,429 125,684 100,907 Total
operating expenses 74,865 67,559
67,769 295,517 259,656
Operating income (15,352 ) (4,612 ) (4,216 )
(25,917 ) 20,850 Gain from divestiture
7,986 - - 7,986 - Gain on sale of wafer fab facility - - 20,656 -
20,656 Other-than-temporary impairment loss on investments (1,708 )
- (667 ) (1,708 ) (2,797 ) Other income (expense), net 258
(344 ) 676 1,708
(1,118 ) Income (loss) from continuing operations before income
taxes (8,816 ) (4,956 ) 16,449 (17,931 ) 37,591 Provision (benefit)
for income taxes 1,811 201 (908
) (2,007 ) 268 Net income (loss) from
continuing operations (10,627 ) (5,157 ) 17,357 (15,924 ) 37,323
Discontinued operations: Gain from divestiture - - - 886
45,939 Loss from discontinued operations - - (4,605 ) (5,131 )
(24,891 ) Provision (benefit) for income taxes -
- - 3 (89 ) Net
income (loss) from discontinued operations - - (4,605 ) (4,248 )
21,137 Net income (loss) $ (10,627 ) $ (5,157 ) $ 12,752
$ (20,172 ) $ 58,460 Basic net income (loss)
per share continuing operations $ (0.07 ) $ (0.04 ) $ 0.12 $ (0.11
) $ 0.26 Basic net income (loss) per share discontinued operations
- - (0.03 ) (0.03 )
0.15 Basic net income (loss) per share $ (0.07 ) $
(0.04 ) $ 0.09 $ (0.14 ) $ 0.41 Diluted net
income (loss) per share continuing operations $ (0.07 ) $ (0.04 ) $
0.12 $ (0.11 ) $ 0.26 Diluted net income (loss) per share
discontinued operations - -
(0.03 ) (0.03 ) 0.14 Diluted net income (loss)
per share $ (0.07 ) $ (0.04 ) $ 0.09 $ (0.14 ) $ 0.40
Weighted average shares: Basic 145,626
144,321 141,455 144,014
143,958 Diluted 145,626 144,321
143,476 144,014 145,848
INTEGRATED DEVICE TECHNOLOGY,
INC. RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(a) (Unaudited) (In thousands, except per share data)
Three
Months Ended Twelve Months Ended Mar. 31, Dec.
30, Apr. 1, Mar. 31, Apr. 1,
2013 2012 2012
2013 2012
GAAP net income (loss) from continuing operations $
(10,627 ) $ (5,157 ) $
17,357 $ (15,924 ) $
37,323 GAAP diluted net income (loss) per share
continuing operations $ (0.07 ) $
(0.04 ) $ 0.12 $
(0.11 ) $ 0.26 Acquisition
related: Amortization of acquisition related intangibles 5,409
4,673 4,360 20,546 16,355 Acquisition related legal and consulting
fees 1,129 2,999 689 12,594 798 Other acquisition related costs - -
- 3,000 - Fair market value adjustment to acquired inventory sold -
- - 458 - Restructuring related: Severance and retention costs
1,662 908 1,439 5,522 2,064 Facility closure costs 2 13 48 62 87
Fabrication production transfer costs - - 678 - 4,572 Gain on
divestiture (7,986 ) (7,986 ) Gain on sale of fabrication facility
- - (20,656 ) - (20,656 ) Assets impairment (37 ) (57 ) (60 ) (212
) (315 ) Other: Other-than-temporary impairment loss on investments
1,708 - 667 1,708 2,797 Stock-based compensation expense 3,966
2,774 3,967 13,479 16,333 Assets impairment 5,724 584 - 6,308 -
Expenses related to stockholder activities (1,000 ) - - 1,614 -
Compensation expense (benefit)—deferred compensation plan 704 87
819 1,135 187 Loss (gain) on deferred compensation plan securities
(696 ) (82 ) (798 ) (941 ) (113 ) Life insurance proceeds received
- - - (2,313 ) - Tax effects of Non-GAAP adjustments 1,544
(588 ) (1,405 ) (7,797 ) (2,818
)
Non-GAAP net income from continuing operations $
1,502 $ 6,154 $ 7,105 $
31,253 $ 56,614 GAAP weighted average shares -
diluted 145,626 144,321 143,476 144,014 145,848 Non-GAAP adjustment
5,026 3,362 1,515
3,598 1,805 Non-GAAP weighted average shares -
diluted 150,652 147,683 144,991
147,612 147,653
Non-GAAP
diluted net income per share continuing operations $
0.01 $ 0.04 $ 0.05
$ 0.21 $ 0.38
GAAP gross profit 59,513
62,947 63,553
269,600 280,506 Acquisition and
divestiture related: Amortization of acquisition related
intangibles 3,210 2,944 2,763 13,666 11,597 Fair market value
adjustment to acquired inventory sold - - - 458 - Restructuring
related: Severance and retention costs - - 1,181 607 357 Facility
closure costs (9 ) 4 4 4 5 Fabrication production transfer costs -
- 678 - 4,572 Assets impairment (37 ) (57 ) (60 ) (212 ) (315 )
Other: Assets impairment - 584 584 - Compensation expense
(benefit)—deferred compensation plan 217 21 205 324 68 Stock-based
compensation expense 263 295 369
1,113 1,784
Non-GAAP gross
profit 63,157 66,738
68,693 286,144
298,574 GAAP R&D expenses:
45,732 40,170
41,340 169,833
158,749 Restructuring related: Severance and
retention costs (1,560 ) (912 ) (246 ) (3,882 ) (1,719 ) Facility
closure costs (6 ) (5 ) (6 ) (43 ) (20 ) Other: Assets impairment
(3,203 ) - - (3,203 ) - Compensation expense (benefit)—deferred
compensation plan (365 ) (53 ) (495 ) (626 ) (86 ) Stock-based
compensation expense (2,146 ) (1,531 ) (2,073
) (7,092 ) (8,566 )
Non-GAAP R&D expenses
38,452 37,669
38,520 154,987
148,358 GAAP SG&A expenses:
29,133 27,389
26,429 125,684
100,907 Acquisition and divestiture related:
Amortization of acquisition related intangibles (2,199 ) (1,729 )
(1,597 ) (6,880 ) (4,758 ) Acquisition related legal and consulting
fees (1,129 ) (2,999 ) (689 ) (12,594 ) (798 ) Other acquisition
related costs - - - (3,000 ) - Restructuring related: Severance and
retention costs (102 ) 4 (12 ) (1,033 ) 12 Facility closure costs
(5 ) (4 ) (38 ) (15 ) (62 ) Other: Assets impairment (2,521 ) -
(2,521 ) - Compensation expense (benefit)—deferred compensation
plan (122 ) (13 ) (119 ) (185 ) (33 ) Stock-based compensation
expense (1,557 ) (948 ) (1,525 ) (5,274 ) (5,983 ) Expenses related
to stockholder activities 1,000 -
- (1,614 ) -
Non-GAAP
SG&A expenses 22,498
21,700 22,449
92,568 89,285 GAAP
interest income and other, net 258 (344 )
676 1,708 (1,118 ) Loss (gain) on
deferred compensation plan securities (696 ) (82 ) (798 ) (941 )
(113 ) Life insurance proceeds received - -
- (2,313 ) -
Non-GAAP
interest income and other, net (438 )
(426 ) (122 )
(1,546 ) (1,231 ) GAAP
provision (benefit) for income taxes continuing operations
1,811 201 (908 ) (2,007 )
268 Tax effects of Non-GAAP adjustments (7) (1,544 )
588 1,405 7,797
2,818
Non-GAAP provision (benefit) for income taxes
continuing operations 267
789 497 5,790
3,086 (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)
Mar. 31, April 1, (In
thousands)
2013 2012
ASSETS Current assets: Cash and cash equivalents $ 130,837 $
134,924 Short-term investments 166,333 190,535 Accounts receivable,
net 62,083 60,609 Inventories 56,555 71,780 Prepaid and other
current assets 23,741 23,684 Total current assets
439,549 481,532 Property, plant and equipment, net 74,988
69,984 Goodwill 144,924 96,092 Acquisition-related intangibles
48,602 40,548 Other assets 19,560 29,478
TOTAL
ASSETS $ 727,623 $ 717,634
LIABILITIES AND
STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $
22,288 $ 25,211 Accrued compensation and related expenses 21,090
26,156 Deferred income on shipments to distributors 14,539 14,263
Deferred taxes liabilities 1,000 421 Other accrued liabilities
14,652 13,443 Total current liabilities 73,569 79,494
Deferred tax liabilities 1,552 1,552 Long term income taxes
payable 454 706 Other long term obligations 22,022
16,494 Total liabilities 97,597 98,246 Stockholders' equity
630,026 619,388
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 727,623 $ 717,634
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