Q1 FY15 Revenue of $126.3M; up 6.5% Q/Q and
7.5% Y/Y
Q1 FY15 GAAP Diluted EPS (from Continuing
Operations) of $0.11
Q1 FY15 Non-GAAP Diluted EPS of $0.17
Integrated Device Technology, Inc. (IDT®) (NASDAQ: IDTI) today
announced results for the fiscal first quarter ended June 29,
2014.
“We are off to a strong start in fiscal 2015 with our first
fiscal quarter results demonstrating consistently improving
financial performance across all key metrics,” said Greg Waters,
president and chief executive officer. “Underpinning these results
was strength and market share gains across all of our end markets;
revenue from our Communications, Computing, and Consumer end
markets all grew sequentially in the quarter. In our Communications
end market, strength in the quarter was driven by our RapidIO
solution, Timing products, and the continued ramp of our RF
solutions, all of which are benefiting from the ongoing global
buildout of 4G/LTE. In our Computing end market, we benefitted from
the DDR3 to DDR4 transition underway in Memory Interface, where we
have market-leading solutions designed in with all key customers.
In our Consumer end market, our wireless power business is strong
and growing. Our recently announced design win with LG is an
industry milestone, where a major Smartphone supplier has embedded
Wireless Charging in their flagship models. We remain in the center
of this exciting and fast-developing market.”
“Looking ahead we are confident in our ability to continue
executing on our growth strategy with all key areas of our business
contributing to that growth,” concluded Mr. Waters.
Recent Business Highlights
- IDT revealed that LG Electronics had
built into its flagship G3 smartphone an IDT wireless power
receiver. The two companies worked together closely to integrate
the chip, which delivers a compact size and simplified application
circuit.
- IDT announced world’s smallest 2-watt
wireless power, delivering leading technology in a compact package
ideal for wearable applications.
- IDT’s IDTP9021 wireless power receiver
was recognized by China’s Electronic Engineering & Product
World (EEPW) magazine with the best power management product
award.
- Focused on wireless communications
systems, IDT introduced the F1650 Modulator, its latest RF signal
path solution, delivering the industry’s lowest power consumption
and highest linearity for today’s wireless products.
- Building on its leadership in RapidIO,
IDT announced its collaboration with eSilicon Corp. to expedite
development of next-generation RapidIO® switches for new system
architectures.
- IDT expanded its leading PCIe timing
portfolio with the release of the industry’s first 1.5 V PCI
Express (PCIe®) timing buffers, enabling designers to reduce system
complexity, physical size, and power consumption.
- The Company won an EDN China Innovation
Award for its Universal Frequency Translator, an
ultra-high-performance programmable timing device that won an EE
Times ACE Award three months earlier.
- IDT announced that it has shipped over
1 million DDR4 registers, the result of growing demand for the next
generation of DRAM modules, including RDIMMs and LRDIMMs.
The following highlights the Company’s financial performance on
both a GAAP and supplemental non-GAAP basis. The Company is
pursuing the divestiture of its high speed data converter business
and is in active discussions with potential buyers. For financial
statement purposes, the high speed data converter business is
classified as assets held for sale and 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 2015 was $126.3 million, compared with
$118.6 million reported last quarter, and $117.5 million reported
in the same period one year ago.
- GAAP net income from continuing
operations for the fiscal first quarter of 2015 was $17.1 million,
or $0.11 per diluted share, versus GAAP net income from continuing
operations of $5.1 million or $0.03 per diluted share last quarter,
and a GAAP net income from continuing operations of $1.5 million or
$0.01 per share in the same period one year ago. Fiscal first
quarter 2015 GAAP results include a $2.6 million loss relating to
amortization of intangible assets and other acquisition/divestiture
related charges, $5.0 million in stock-based compensation expense,
$2.9 million in accelerated depreciation, impairments and other
restructuring related charges, and $0.9 million in related tax
effects.
- Non-GAAP net income for the fiscal
first quarter of 2015 was $26.7 million or $0.17 per diluted share,
compared with non-GAAP net income of $21.7 million or $0.14 per
diluted share last quarter, and non-GAAP net income of $10.6
million or $0.07 per diluted share reported in the same period one
year ago.
- GAAP gross profit from continuing
operations for the fiscal first quarter of 2015 was $74.0 million,
or 58.6 percent, compared with GAAP gross profit of $61.1 million
or 51.5 percent last quarter, and $66.1 million, or 56.3 percent,
reported in the same period one year ago. Non-GAAP gross profit for
the fiscal first quarter of 2015 was $78.1 million, or 61.9
percent, compared with non-GAAP gross profit of $72.4 million, or
61.1 percent last quarter, and $68.8 million, or 58.6 percent,
reported in the same period one year ago.
- GAAP R&D expense for the fiscal
first quarter of 2015 was $32.1 million, compared with GAAP R&D
expense of $32.9 million last quarter, and $37.9 million reported
in the same period one year ago. Non-GAAP R&D expense for the
fiscal first quarter of 2015 was $28.7 million, compared with
non-GAAP R&D of $28.6 million last quarter, and $34.6 million
in the same period one year ago.
- GAAP SG&A expense for the fiscal
first quarter of 2015 was $25.5 million, compared with GAAP
SG&A expense of $ 23.3 million last quarter, and $26.8 million
in the same period one year ago. Non-GAAP SG&A expense for the
fiscal first quarter of 2015 was $22.1 million, compared with
non-GAAP SG&A expense of $21.0 million last quarter, and $23.2
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 July 28, 2014. The webcast replay will be available
after 5 p.m. Pacific time on July 28, 2014.
Investors may also listen to the live call at 1:30 p.m. Pacific
time on July 28, 2014 by calling (888) 461-2024 or (719) 457-2645.
The access code is 9736805. The conference call replay will be
available for one week after the event at (888) 203-1112 or (719)
457-0820. The access code is 9736805.
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, 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 March 30, 2014. 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 (benefit) for 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 2015 the Company used a projected
long-term non-GAAP tax rate of 4%. When projecting this long-term
rate, the Company evaluated its current long-term projections,
current tax structure and other factors such as the Company’s
existing tax positions in various jurisdictions and key
legislations in major jurisdictions where the company operates. The
Company intends to re-evaluate this long-term rate only on an
annual basis. This long-term non-GAAP tax rate eliminates the
effects of non-recurring and period specific items which can vary
in size and frequency, and will provide better consistency within
the interim reporting periods. This long-term rate could be subject
to change for a variety of reasons, for example, significant
structural changes in the geographic earnings mix including
acquisition activity, or fundamental tax law changes in major
jurisdictions where the Company operates.
- 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 29, Mar. 30, June 30,
2014 2014 2013
Revenues $ 126,302 $ 118,640 $ 117,464 Cost of revenues
52,293 57,560 51,342
Gross profit 74,009 61,080 66,122 Operating expenses: Research and
development 32,050 32,860 37,939 Selling, general and
administrative 25,459 23,322
26,838 Total operating expenses 57,509
56,182 64,777 Operating income
16,500 4,898 1,345 Loss
from divestiture - (302 ) - Other income, net 862
786 57 Income from continuing
operations before income taxes 17,362 5,382 1,402 Provision for
(benefit from) income taxes 251 320
(99 ) Net income from continuing operations 17,111
5,062 1,501 Discontinued operations: Gain from divestiture
16,840 - - Loss from discontinued operations (12,153 ) (5,016 )
(3,864 ) Provision for (benefit from) for income taxes (45 )
17 (99 ) Net income (loss) from discontinued
operations 4,732 (5,033 ) (3,765 ) Net income (loss) $
21,843 $ 29 $ (2,264 ) Basic net income per
share - continuing operations $ 0.11 $ 0.03 $ 0.01 Basic net income
(loss) per share - discontinued operations 0.04
(0.03 ) (0.03 ) Basic net income (loss) per share $
0.15 $ - $ (0.02 ) Diluted net income per
share - continuing operations $ 0.11 $ 0.03 $ 0.01 Diluted net
income (loss) per share - discontinued operations 0.03
(0.03 ) (0.03 ) Diluted net income (loss) per
share $ 0.14 $ - $ (0.02 ) Weighted average
shares: Basic 149,283 150,033
147,056 Diluted 153,741 154,390
150,241
INTEGRATED DEVICE TECHNOLOGY,
INC. RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(a) (Unaudited) (In thousands, except per share data)
Three
Months Ended June 29, Mar. 30, June 30,
2014 2014
2013
GAAP net income from continuing
operations
$ 17,111
$ 5,062 $
1,501 GAAP diluted net income per share continuing
operations $ 0.11
$ 0.03 $
0.01 Acquisition related: Amortization of acquisition
related intangibles 2,549
11,999 3,321 Impairment of in-process research and development -
2,433 - Acquisition related legal and consulting fees -
73 468 Restructuring related: Severance and retention costs 526
383 1,174 Facility closure costs 47
107 8 Loss on divestiture -
302 - Assets impairment and other 2,302
334 (36 ) Other: Stock-based compensation expense 4,962
2,368 4,820 Compensation expense (benefit) - deferred compensation
plan 494
185 (100 ) (Gain) loss on deferred compensation plan securities
(480 )
(171 ) 101 Tax effects of Non-GAAP adjustments (859 )
(1,331 ) (662 )
Non-GAAP net income from continuing operations $
26,652
$ 21,744 $ 10,595 GAAP weighted average
shares - diluted 153,741
154,390 150,241 Non-GAAP adjustment 1,867
1,492 2,699
Non-GAAP weighted average shares - diluted 155,608
155,882 152,940
Non-GAAP diluted net income per share continuing
operations $ 0.17
$ 0.14 $
0.07 GAAP gross profit
74,009
61,080
66,122 Acquisition and divestiture related:
Amortization of acquisition related intangibles 1,686
11,016 2,435 Restructuring related: Severance and retention
costs 23
117 1 Facility closure costs -
- 2 Assets impairment and other 1,935
105 (36 ) Other: Compensation expense (benefit) - deferred
compensation plan 147
55 (31 ) Stock-based compensation expense 319
61 333
Non-GAAP gross profit 78,119
72,434
68,826 GAAP R&D expenses:
32,050
32,860
37,939 Restructuring related: Impairment of acquired
in-process R&D - (2,433 ) - Severance and retention costs (240
)
(264 ) (1,092 ) Facility closure costs -
- (2 ) Assets impairment and other (367 ) (63 ) - Other:
Compensation expense (benefit) - deferred compensation plan (240 )
(90 ) 52 Stock-based compensation expense (2,521 )
(1,389 ) (2,315 )
Non-GAAP R&D expenses 28,682
28,621
34,582 GAAP SG&A expenses:
25,459
23,322
26,838 Acquisition and divestiture related:
Amortization of acquisition related intangibles (863 )
(983 ) (886 ) Acquisition related legal and consulting fees -
(73 ) (468 ) Restructuring related: Severance and retention costs
(263 )
(2 ) (81 ) Facility closure costs (47 )
(107 ) (4 ) Assets impairment and other -
(166 ) - Other: Compensation expense (benefit) - deferred
compensation plan (107 )
(40 ) 17 Stock-based compensation expense (2,122 )
(918 ) (2,172 )
Non-GAAP SG&A expenses 22,057
21,033
23,244 GAAP interest income and other,
net 862
786 57 (Gain) loss on deferred compensation plan
securities (480 )
(171 ) 101
Non-GAAP interest income and other, net 382
615
158 GAAP provision from (benefit from)
income taxes - continuing operations 251
320 (99 ) Tax effects of Non-GAAP adjustments
859
1,331 662
Non-GAAP provision for income taxes continuing operations
1,110
1,651
563 (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 29, March 30, (In
thousands)
2014 2014
ASSETS Current assets: Cash and cash equivalents $ 104,384 $
91,211 Short-term investments 359,819 362,604 Accounts receivable,
net 72,058 68,904 Inventories 45,749 49,622 Prepaid and other
current assets 10,547 13,034 Total current assets
592,557 585,375 Property, plant and equipment, net 65,941
69,827 Goodwill 135,644 135,644 Acquisition-related intangibles
9,558 18,741 Other assets 24,078 21,373
TOTAL
ASSETS $ 827,778 $ 830,960
LIABILITIES AND
STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $
23,230 $ 25,442 Accrued compensation and related expenses 23,252
24,343 Deferred income on shipments to distributors 14,126 14,006
Deferred taxes liabilities 1,393 1,346 Other accrued liabilities
7,745 11,525 Total current liabilities 69,746 76,662
Deferred tax liabilities 1,494 1,494 Long term income taxes
payable 270 266 Other long term obligations 19,254
18,683 Total liabilities 90,764 97,105 Stockholders' equity
737,014 733,855
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 827,778 $ 830,960
Financial Contact:Suzanne Schmidt, 415-217-4962IDT
Investor Relationssuzanne@blueshirtgroup.comorPress
Contact:Graham Robertson, 408-284-2644IDT Worldwide
Marketinggraham.robertson@idt.com
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