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 first quarter ended June 30, 2013.
“We were pleased to deliver Q1 results that were ahead of our
prior projections,” said Dr. Ted Tewksbury, president and CEO of
IDT. “Revenue from RapidIO solutions serving our 4G/LTE base
station customers hit record levels and sales from our core timing
and memory interface product lines improved significantly from the
prior quarter. We also expanded operating margins through continued
improvements in gross margin and persistent focus on cost
controls.”
“We’re off to a strong start for fiscal 2014 with improving
fundamentals and leadership positions in timing, wireless power and
interfaces. With major product declines behind us, new products
designed in and revenue ramping, our attention is focused on
continued operating margin expansion. We remain committed to
delivering 60 percent non-GAAP gross margins and 20 percent
non-GAAP operating margins through growth in our core and new
product businesses combined with judicious cost reductions.”
Recent Highlights
IDT recently announced:
- The divestiture of its PCI Express
enterprise flash controller business to PMC-Sierra for
approximately $96 million in cash.
- The industry’s first low-power quad
16-bit DACs with high-speed JESD204B interface enabling wide
bandwidth support and simplified board routing in 4G multi-carrier
broadband wireless applications.
- A low-noise timing chipset for wireless
base station radio cards, offering engineers the tools needed to
solve phase noise-related challenges and build cutting-edge
wireless systems.
- The World’s lowest jitter Synchronous
Ethernet single-chip timing solution that reduces jitter by over 50
percent versus competing solutions and meets the industry’s most
stringent 10G or 40G Ethernet performance requirements.
- Breakthrough timing architectures
enabling the industry’s lowest phase noise VCO and fractional
output divider. The new designs empower customers to solve phase
noise-related challenges in high-performance communication and
networking applications.
- A cross-platform power management
solution system-validated by Intel, for Intel® Atom™ processors,
Intel® Xeon® processors and Intel® Core™ processors. IDT’s
innovative distributed power solution offers tremendous flexibility
for point-of-load regulation, circuit board routing, and thermal
distribution.
- The industry’s most integrated WPC 1.1
Qi-certified wireless power transmitters, offering wireless charger
manufacturers the smallest application footprint and
bill-of-materials (BOM) of any solution on the market today.
- Its wireless power transmitter has been
selected for TYLT’s award-winning “VÜ” wireless charging base.
IDT’s solution was selected for its multi-coil support, compact
size, reduced bill-of-materials (BOM), functional flexibility,
programmability, and superior customer support.
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 first quarter of
2014 was $118.0 million, compared with $130.2 million reported in
the same period one year ago.
- GAAP net loss from continuing
operations for the fiscal first quarter of 2014 was $2.3 million,
or a loss of $0.02 per diluted share, versus GAAP net income from
continuing operations of $0.5 million or breakeven per diluted
share in the same period one year ago. Fiscal first quarter 2014
GAAP results include $6.2 million in acquisition and restructuring
related charges, $5.0 million in stock-based compensation, and $0.8
million from related tax effects.
- Non-GAAP net income from continuing
operations for the fiscal first quarter of 2014 was $8.2 million or
$0.05 per diluted share, compared with non-GAAP net income from
continuing operations of $11.0 million or $0.08 per diluted share
reported in the same period one year ago.
- GAAP gross profit for the fiscal first
quarter of 2014 was $66.2 million, or 56.1 percent, compared with
GAAP gross profit of $72.5 million, or 55.7 percent, reported in
the same period one year ago. Non-GAAP gross profit for the fiscal
first quarter of 2014 was $69.3 million, or 58.8 percent, compared
with non-GAAP gross profit of $77.0 million, or 59.2 percent,
reported in the same period one year ago.
- GAAP R&D expense for the fiscal
first quarter of 2014 was $40.8 million, compared with GAAP R&D
expense of $41.5 million reported in the same period one year ago.
Non-GAAP R&D expense for the fiscal first quarter of 2014 was
$37.3 million, compared with non-GAAP R&D of $39.7 million in
the same period one year ago.
- GAAP SG&A expense for the fiscal
first quarter of 2014 was $27.8 million, compared with GAAP
SG&A expense of $36.4 million in the same period one year ago.
Non-GAAP SG&A expense for the fiscal first quarter of 2014 was
$23.4 million, compared with non-GAAP SG&A expense of $24.6
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 July 25, 2013. The webcast replay will be available
after 5 p.m. Pacific time on July 25, 2013.
Investors can also listen to the live call at 1:30 p.m. Pacific
time on July 25, 2013 by calling (800) 288-8975 or (612) 332-0932.
The conference call replay will be available after 5 p.m. Pacific
time on July 25, 2013 through 11:59 p.m. Pacific time on August 1,
2013 at (800) 475-6701 or (320) 365-3844. The access code is
298311.
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.
- 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 June 30, March 31, July 1,
2013 2013 2012
Revenues $ 117,982 $ 108,527 $ 130,161 Cost of revenues
51,809 49,014 57,648
Gross profit 66,173 59,513 72,513 Operating expenses: Research and
development 40,849 45,732 41,544 Selling, general and
administrative 27,843 29,133
36,412 Total operating expenses 68,692
74,865 77,956 Operating loss
(2,519 ) (15,352 ) (5,443 ) Gain from
divestiture - 7,986 - Other-than-temporary impairment loss on
investments - (1,708 ) - Other income (expense), net 57
258 2,000 Loss from continuing
operations before income taxes (2,462 ) (8,816 ) (3,443 ) Provision
(benefit) for income taxes (198 ) 1,811
(3,986 ) Net income (loss) from continuing operations (2,264
) (10,627 ) 543 Discontinued operations: Loss from
discontinued operations - - (4,858 ) Provision (benefit) for income
taxes - - - Net income
(loss) from discontinued operations - - (4,858 ) Net Loss $
(2,264 ) $ (10,627 ) $ (4,315 ) Basic net loss per share
continuing operations $ (0.02 ) $ (0.07 ) $ - Basic net loss per
share discontinued operations - -
(0.03 ) Basic net loss per share $ (0.02 ) $ (0.07 ) $ (0.03
) Diluted net loss per share continuing operations $ (0.02 )
$ (0.07 ) $ - Diluted net loss per share discontinued operations
- - (0.03 ) Diluted net loss per
share $ (0.02 ) $ (0.07 ) $ (0.03 ) Weighted average shares:
Basic 147,056 145,626 142,595
Diluted 147,056 145,626
143,984
INTEGRATED DEVICE TECHNOLOGY, INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (a)
(Unaudited) (In thousands, except per share data)
Three Months
Ended June 30, March 31, July 1,
2013 2013 2012
GAAP net income (loss) from continuing
operations $ (2,264 ) $
(10,627 ) $ 543 GAAP diluted
net loss per share continuing operations $ (0.02
) $ (0.07 ) $ -
Acquisition related: Amortization of acquisition related
intangibles 4,321 5,409 4,891 Acquisition related legal and
consulting fees 730 1,129 4,836 Other acquisition related costs - -
1,800 Fair market value adjustment to acquired inventory sold - -
358 Restructuring related: Severance and retention costs 1,174
1,662 715 Facility closure costs 8 2 13 Gain on divestiture -
(7,986 ) - Assets impairment (36 ) (37 ) (59 ) Other:
Other-than-temporary impairment loss on investments - 1,708 -
Stock-based compensation expense 4,986 3,966 3,122 Assets
impairment - 5,724 - Expenses related to stockholder activities -
(1,000 ) 2,576 Compensation expense (benefit)—deferred compensation
plan (100 ) 704 (136 ) Loss (gain) on deferred compensation plan
securities 101 (696 ) 314 Life insurance proceeds received - -
(2,313 ) Tax effects of Non-GAAP adjustments (761 )
1,544 (5,677 )
Non-GAAP net income from continuing
operations $ 8,159 $ 1,502 $
10,983 GAAP weighted average shares - diluted 147,056
145,626 143,984 Non-GAAP adjustment 5,884
5,026 1,716 Non-GAAP weighted average shares -
diluted 152,940 150,652 145,700
Non-GAAP diluted net income per share continuing
operations $ 0.05 $ 0.01
$ 0.08 GAAP gross profit
66,173 59,513
72,513 Acquisition and divestiture related:
Amortization of acquisition related intangibles 2,905 3,210 3,622
Fair market value adjustment to acquired inventory sold - - 358
Restructuring related: Severance and retention costs 1 - 301
Facility closure costs 2 (9 ) 6 Assets impairment (36 ) (37 ) (59 )
Other: Compensation expense (benefit)—deferred compensation plan
(31 ) 217 (34 ) Stock-based compensation expense 333
263 303
Non-GAAP gross profit
69,347 63,157
77,010 GAAP R&D expenses:
40,849 45,732
41,544 Restructuring related: Severance and retention
costs (1,092 ) (1,560 ) (340 ) Facility closure costs (2 ) (6 ) (4
) Other: Assets impairment - (3,203 ) - Compensation expense
(benefit)—deferred compensation plan 52 (365 ) 82 Stock-based
compensation expense (2,472 ) (2,146 ) (1,542
)
Non-GAAP R&D expenses 37,335
38,452 39,740
GAAP SG&A expenses: 27,843
29,133 36,412 Acquisition and
divestiture related: Amortization of acquisition related
intangibles (1,416 ) (2,199 ) (1,269 ) Acquisition related legal
and consulting fees (730 ) (1,129 ) (4,836 ) Other acquisition
related costs - - (1,800 ) Restructuring related: Severance and
retention costs (81 ) (102 ) (74 ) Facility closure costs (4 ) (5 )
(3 ) Other: Assets impairment - (2,521 ) - Compensation expense
(benefit)—deferred compensation plan 17 (122 ) 20 Stock-based
compensation expense (2,181 ) (1,557 ) (1,277 ) Expenses related to
stockholder activities - 1,000
(2,576 )
Non-GAAP SG&A expenses 23,448
22,498 24,597
GAAP interest income and other, net 57
258 2,000 Loss (gain) on deferred compensation plan
securities 101 (696 ) 314 Life insurance proceeds received -
- (2,313 )
Non-GAAP interest income
and other, net 158 (438
) 1 GAAP provision (benefit)
for income taxes continuing operations (198 )
1,811 (3,986 )
Tax effects of Non-GAAP adjustments
761 (1,544 ) 5,677
Non-GAAP
provision (benefit) for income taxes continuing operations
563 267
1,691 (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 30, March 31, (In thousands)
2013
2013 ASSETS Current assets: Cash and
cash equivalents $ 113,995 $ 130,837 Short-term investments 196,242
166,333 Accounts receivable, net 65,647 62,083 Inventories 56,827
56,555 Prepaid and other current assets 22,650 24,697
Total current assets 455,361 440,505 Property, plant and
equipment, net 76,163 74,988 Goodwill 144,924 144,924
Acquisition-related intangibles 44,281 48,602 Other assets
18,611 19,560
TOTAL ASSETS $ 739,340 $ 728,579
LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities:
Accounts payable $ 27,843 $ 23,244 Accrued compensation and related
expenses 22,589 21,090 Deferred income on shipments to distributors
13,962 14,539 Deferred taxes liabilities 1,005 1,000 Other accrued
liabilities 11,813 14,652 Total current liabilities
77,212 74,525 Deferred tax liabilities 1,552 1,552 Long term
income taxes payable 284 454 Other long term obligations
20,673 22,022 Total liabilities 99,721 98,553
Stockholders' equity 639,619 630,026
TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY $ 739,340 $ 728,579
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