NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Summary of Significant Accounting Policies
Nature of Business
.
Integrated Device Technology, Inc. (IDT or the Company) designs, develops, manufactures and markets a broad range of integrated circuits for the advanced communications, computing and consumer industries.
Basis of Presentation
.
The Company's fiscal year is the 52- or 53-week period ending on the Sunday closest to March 31. In a 52-week year, each fiscal quarter consists of 13 weeks. In a 53-week year, the additional week is usually added to the third quarter, making such quarter consist of 14 weeks. The first quarters of fiscal 2015 and fiscal 2014 were 13-week periods.
Principles of Consolidation
. The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All inter-company accounts and transactions have been eliminated.
Use of Estimates
. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.
Significant Accounting Policies
.
For a description of significant accounting policies, see Note 1, Summary of Significant Accounting Policies to the consolidated financial statements included in the Company's annual report on Form 10-K for the fiscal year ended March 30, 2014. There have been no material changes to the Company's significant accounting policies since the filing of the annual report on Form 10-K.
In the opinion of management, these condensed consolidated financial statements reflect all adjustments, consisting only of normal recurring adjustments, which are necessary for the fair presentation of the condensed consolidated financial statements, for the interim period.
Recent Accounting Pronouncements
.
Accounting Pronouncements Recently Adopted
In February 2013, the Financial Accounting Standards Board (FASB) issued guidance for the recognition, measurement, and disclosure of certain obligations resulting from joint and several liability arrangements for which the total amount is fixed. Such obligations may include debt arrangements, legal settlements, and other contractual arrangements. The guidance is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2013 and should be applied retrospectively to all prior periods presented for those obligations within the scope which existed as of the beginning of the fiscal year of adoption. The Company adopted this guidance in the first quarter of fiscal 2015 and the adoption did not have a significant impact on the Company's condensed consolidated financial statements.
In March 2013, the FASB issued guidance on the accounting for the cumulative translation adjustment upon derecognition of certain subsidiaries or groups of assets within a foreign entity or of an investment in a foreign entity. The guidance is effective prospectively for fiscal years and interim periods within those fiscal years beginning after December 15, 2013. The Company adopted this guidance in the first quarter of fiscal 2015 and the adoption did not have a significant impact on the Company's condensed consolidated financial statements.
In July 2013, FASB issued an Accounting Standards Update (ASU) on Income Taxes, to improve the presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. This guidance is expected to reduce diversity in practice and is expected to better reflect the manner in which an entity would settle at the reporting date any additional income taxes that would result from the disallowance of a tax position when net operating loss carryforwards, similar tax losses, or tax credit carryforwards exists. This guidance is effective for interim and annual periods beginning after December 15, 2013, which, for the Company, is the first quarter of fiscal 2015. The Company has historically accounted for its unrecognized tax benefits in accordance with this guidance and as such, adoption of this guidance had no impact on its condensed consolidated financial statements.
Accounting Pronouncements Not Yet Effective for Fiscal 2015
On May 28, 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The new standard is effective for the Company starting fiscal 2018. Early application is not permitted. The standard permits the use of either the retrospective or cumulative effect transition method. The Company is evaluating the effect that ASU 2014-09 will have on its consolidated financial statements and related disclosures. The Company has not yet selected a transition method nor has it determined the effect of the standard on its ongoing financial reporting.
Note 2. Net Income Per Share
Basic net income per share is computed using the weighted-average number of common shares outstanding during the period. Diluted net income per share is computed using the weighted-average number of common and dilutive potential common shares outstanding during the period. Potential common shares include employee stock options and restricted stock units. For purposes of computing diluted net income per share, weighted average potential common shares do not include potential common shares that are anti-dilutive under the treasury stock method.
The following table sets forth the computation of basic and diluted net income per share from continuing operations:
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
(in thousands, except per share amounts)
|
June 29,
2014
|
|
June 30,
2013
|
Numerator (basic and diluted):
|
|
|
|
Net income from continuing operations
|
$
|
17,111
|
|
|
$
|
1,501
|
|
|
|
|
|
Denominator:
|
|
|
|
Weighted average common shares outstanding, basic
|
149,283
|
|
|
147,056
|
|
Dilutive effect of employee stock options and restricted stock units
|
4,458
|
|
|
3,185
|
|
Weighted average common shares outstanding, diluted
|
153,741
|
|
|
150,241
|
|
|
|
|
|
Basic net income per share from continuing operations
|
$
|
0.11
|
|
|
$
|
0.01
|
|
Diluted net income per share from continuing operations
|
$
|
0.11
|
|
|
$
|
0.01
|
|
Potential dilutive common shares of
0.7 million
and
4.8 million
pertaining to employee stock options and restricted stock units were excluded from the calculation of diluted earnings per share for the three months ended
June 29, 2014
and
June 30, 2013
, respectively, because the effect would have been anti-dilutive.
Note 3. Discontinued Operations
High-Speed Converter (“HSC”) Business
In the third quarter of fiscal 2014, the Company initiated a project to divest its HSC business. The Company believes that this divestiture would allow it to strengthen its focus on its analog-intensive mixed-signal, timing and synchronization, and interface and connectivity solutions. The Company envisions fully divesting its HSC business within the twelve months from the initiation date of the plan and has classified these assets as held for sale and accordingly these assets are no longer being depreciated or amortized.
The HSC business includes the assets of NXP B.V.’s Data Converter Business and Alvand Technologies, Inc., which were acquired by the Company during fiscal 2013. The total purchase consideration paid by the Company to acquire Alvand Technologies, Inc. included a liability representing the fair value of contingent cash consideration which is paid based upon the achievement of future product development milestones to be completed within 3 years following the acquisition date. As of
March 30, 2014
, the remaining estimated fair value of the unpaid contingent consideration was
$2.1 million
, of which the Company paid
$1.6 million
and released the remaining contingent consideration of
$0.5 million
to discontinued operations in the Condensed Consolidated Statement of Operations for the three months ended
June 29, 2014
, as the remaining future milestones will not be achieved as a result of the asset sale discussed below.
On May 30, 2014, the Company completed the sale of certain assets related to the Alvand portion of the HSC business to a buyer pursuant to an Asset Purchase Agreement. Upon the closing of the transaction, the buyer paid the Company
$18.0 million
in cash consideration, of which
$2.7 million
will be held in an escrow account for a period of 18 months. For the three months ended
June 29, 2014
, the Company recorded a gain of
$16.8 million
related to this divestiture. The following table summarizes the components of the gain (in thousands):
|
|
|
|
|
|
Amount
|
Cash proceeds from sale (including amounts held in escrow)
|
$
|
18,000
|
|
Less book value of assets sold and direct costs related to the sale:
|
|
Intangible assets
|
(990
|
)
|
Transaction and other costs
|
(170
|
)
|
Gain on divestiture
|
$
|
16,840
|
|
Following the sale of assets related to the Alvand portion of the HSC business, the business had remaining long-lived assets classified as held for sale amounting to
$8.5 million
, which consisted of
$2.9 million
in fixed assets and
$5.6 million
in intangible assets. The Company evaluated the carrying value of these assets and determined that it exceeded its estimated fair value based on estimated selling price less cost to sell. Accordingly, total impairment charge of
$8.5 million
was recorded to loss from discontinued operations in the Condensed Consolidated Statement of Operations for the three months ended
June 29, 2014
.
The HSC business was included in the Company’s Communications reportable segment. For financial statements purposes, the results of operations for the HSC business have been segregated from those of the continuing operations and are presented in the Company's condensed consolidated financial statements as discontinued operations.
The results of discontinued operations of the HSC business for the three months ended
June 29, 2014
and
June 30, 2013
were as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
June 29, 2014
|
|
June 30, 2013
|
Revenues
|
|
$
|
1,006
|
|
|
$
|
518
|
|
Cost of revenues
|
|
(605
|
)
|
|
(467
|
)
|
Long-lived assets impairment
|
|
(8,471
|
)
|
|
—
|
|
Operating expenses
|
|
(4,083
|
)
|
|
(3,915
|
)
|
Gain on divestiture
|
|
16,840
|
|
|
—
|
|
Income tax benefit
|
|
45
|
|
|
99
|
|
Net income (loss) from discontinued operations
|
|
$
|
4,732
|
|
|
$
|
(3,765
|
)
|
Note 4. Fair Value Measurement
The following table summarizes the Company’s financial assets and liabilities measured at fair value on a recurring basis as of
June 29, 2014
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value at Reporting Date Using
|
(in thousands)
|
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
|
|
Significant Other
Observable Inputs
(Level 2)
|
|
Significant Unobservable Inputs
(Level 3)
|
|
Total
|
Cash Equivalents and Short-Term investments:
|
|
|
|
|
|
|
|
US government treasuries and agencies securities
|
$
|
110,814
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
110,814
|
|
Money market funds
|
42,737
|
|
|
—
|
|
|
—
|
|
|
42,737
|
|
Asset-backed securities
|
—
|
|
|
25,019
|
|
|
—
|
|
|
25,019
|
|
Corporate bonds
|
—
|
|
|
199,783
|
|
|
—
|
|
|
199,783
|
|
International government bonds
|
—
|
|
|
1,006
|
|
|
—
|
|
|
1,006
|
|
Corporate commercial paper
|
—
|
|
|
5,295
|
|
|
—
|
|
|
5,295
|
|
Bank deposits
|
—
|
|
|
13,934
|
|
|
—
|
|
|
13,934
|
|
Repurchase agreement
|
—
|
|
|
164
|
|
|
—
|
|
|
164
|
|
Municipal bonds
|
—
|
|
|
10,107
|
|
|
—
|
|
|
10,107
|
|
Total assets measured at fair value
|
$
|
153,551
|
|
|
$
|
255,308
|
|
|
$
|
—
|
|
|
$
|
408,859
|
|
The following table summarizes the Company’s financial assets and liabilities measured at fair value on a recurring basis as of
March 30, 2014
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value at Reporting Date Using
|
(in thousands)
|
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
|
|
Significant Other
Observable Inputs
(Level 2)
|
|
Significant Unobservable Inputs
(Level 3)
|
|
Total
|
Cash Equivalents and Short-Term investments:
|
|
|
|
|
|
|
|
US government treasuries and agencies securities
|
$
|
112,253
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
112,253
|
|
Money market funds
|
53,430
|
|
|
—
|
|
|
—
|
|
|
53,430
|
|
Asset-backed securities
|
—
|
|
|
22,332
|
|
|
—
|
|
|
22,332
|
|
Corporate bonds
|
—
|
|
|
199,806
|
|
|
—
|
|
|
199,806
|
|
International government bonds
|
—
|
|
|
3,014
|
|
|
—
|
|
|
3,014
|
|
Corporate commercial paper
|
—
|
|
|
6,246
|
|
|
—
|
|
|
6,246
|
|
Bank deposits
|
—
|
|
|
18,538
|
|
|
—
|
|
|
18,538
|
|
Repurchase agreements
|
—
|
|
|
46
|
|
|
—
|
|
|
46
|
|
Municipal bonds
|
—
|
|
|
9,210
|
|
|
—
|
|
|
9,210
|
|
Total assets measured at fair value
|
$
|
165,683
|
|
|
$
|
259,192
|
|
|
$
|
—
|
|
|
$
|
424,875
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
Fair value of contingent consideration
|
—
|
|
|
—
|
|
|
2,140
|
|
|
2,140
|
|
Total liabilities measured at fair value
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,140
|
|
|
$
|
2,140
|
|
U.S. government treasuries and U.S. government agency securities as of
June 29, 2014
and
March 30, 2014
do not include any U.S. government guaranteed bank issued paper. Corporate bonds include bank-issued securities that are guaranteed by the Federal Deposit Insurance Corporation (FDIC).
The securities in Level 1 are highly liquid and actively traded in exchange markets or over-the-counter markets. Level 2 fixed income securities are priced using quoted market prices for similar instruments, non-binding market prices that are corroborated by observable market data.
In connection with the acquisition of Alvand Technologies in fiscal 2013, liability was recognized for the Company’s estimate of the fair value of contingent consideration on the acquisition date based on probability-based forecasted revenues, gross profits and attainment of product development milestones. These fair value measurements are based on significant inputs not observed in the market and thus represent a Level 3 measurement, which reflect the Company’s own assumptions concerning future revenues, gross profit and product development milestones of the acquired businesses in measuring fair value.
The following table summarizes the change in the fair value of the contingent consideration measured using significant unobservable inputs (Level 3) for the
three
months ended
June 29, 2014
:
|
|
|
|
|
(
in thousands
)
|
Estimated Fair Value
|
Balance as of March 30, 2014
|
$
|
2,140
|
|
Payment, net of fair value adjustments
|
(1,600
|
)
|
Release
|
(540
|
)
|
Balance as of June 29, 2014
|
$
|
—
|
|
All of the Company’s available-for-sale investments are subject to a periodic impairment review. Investments are considered to be impaired when a decline in fair value is judged to be other-than-temporary. The Company did not record any impairment charges related to its available-for-sale investments in the
three
months ended
June 29, 2014
and
June 30, 2013
.
Note 5. Investments
Available-for-Sale Securities
Available-for-sale investments at
June 29, 2014
were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands)
|
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Estimated Fair
Value
|
U.S. government treasuries and agencies securities
|
$
|
110,656
|
|
|
$
|
175
|
|
|
$
|
(17
|
)
|
|
$
|
110,814
|
|
Money market funds
|
42,737
|
|
|
—
|
|
|
—
|
|
|
42,737
|
|
Asset-backed securities
|
24,989
|
|
|
31
|
|
|
(1
|
)
|
|
25,019
|
|
Corporate bonds
|
199,375
|
|
|
456
|
|
|
(48
|
)
|
|
199,783
|
|
International government bonds
|
1,013
|
|
|
—
|
|
|
(7
|
)
|
|
1,006
|
|
Corporate commercial paper
|
5,295
|
|
|
—
|
|
|
—
|
|
|
5,295
|
|
Bank deposits
|
13,934
|
|
|
—
|
|
|
—
|
|
|
13,934
|
|
Repurchase agreements
|
164
|
|
|
—
|
|
|
—
|
|
|
164
|
|
Municipal bonds
|
10,065
|
|
|
48
|
|
|
(6
|
)
|
|
10,107
|
|
Total available-for-sale investments
|
408,228
|
|
|
710
|
|
|
(79
|
)
|
|
408,859
|
|
Less amounts classified as cash equivalents
|
(49,040
|
)
|
|
—
|
|
|
—
|
|
|
(49,040
|
)
|
Short-term investments
|
$
|
359,188
|
|
|
$
|
710
|
|
|
$
|
(79
|
)
|
|
$
|
359,819
|
|
Available-for-sale investments at
March 30, 2014
were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands)
|
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Estimated Fair
Value
|
U.S. government treasuries and agencies securities
|
$
|
112,268
|
|
|
$
|
76
|
|
|
$
|
(91
|
)
|
|
$
|
112,253
|
|
Money market funds
|
53,430
|
|
|
—
|
|
|
—
|
|
|
53,430
|
|
Asset-backed securities
|
22,330
|
|
|
11
|
|
|
(9
|
)
|
|
22,332
|
|
Corporate bonds
|
199,598
|
|
|
335
|
|
|
(127
|
)
|
|
199,806
|
|
International government bonds
|
3,023
|
|
|
—
|
|
|
(9
|
)
|
|
3,014
|
|
Corporate commercial paper
|
6,246
|
|
|
—
|
|
|
—
|
|
|
6,246
|
|
Bank deposits
|
18,538
|
|
|
—
|
|
|
—
|
|
|
18,538
|
|
Repurchase agreements
|
46
|
|
|
—
|
|
|
—
|
|
|
46
|
|
Municipal bonds
|
9,196
|
|
|
32
|
|
|
(18
|
)
|
|
9,210
|
|
Total available-for-sale investments
|
424,675
|
|
|
454
|
|
|
(254
|
)
|
|
424,875
|
|
Less amounts classified as cash equivalents
|
(62,271
|
)
|
|
—
|
|
|
—
|
|
|
(62,271
|
)
|
Short-term investments
|
$
|
362,404
|
|
|
$
|
454
|
|
|
$
|
(254
|
)
|
|
$
|
362,604
|
|
The cost and estimated fair value of available-for-sale securities at
June 29, 2014
, by contractual maturity, were as follows:
|
|
|
|
|
|
|
|
|
(
in thousands
)
|
Amortized
Cost
|
|
Estimated Fair
Value
|
Due in 1 year or less
|
$
|
150,108
|
|
|
$
|
150,210
|
|
Due in 1-2 years
|
103,666
|
|
|
103,888
|
|
Due in 2-5 years
|
154,454
|
|
|
154,761
|
|
Total investments in available-for-sale securities
|
$
|
408,228
|
|
|
$
|
408,859
|
|
The following table shows the gross unrealized losses and fair value of the Company’s investments with unrealized losses as of
June 29, 2014
, aggregated by investment category and length of time that individual securities have been in a continuous loss position.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less Than 12 Months
|
|
12 Months or Greater
|
|
Total
|
(in thousands)
|
Fair
Value
|
|
Unrealized
Loss
|
|
Fair
Value
|
|
Unrealized
Loss
|
|
Fair
Value
|
|
Unrealized
Loss
|
Corporate bonds
|
$
|
32,381
|
|
|
$
|
(40
|
)
|
|
$
|
724
|
|
|
$
|
(8
|
)
|
|
$
|
33,105
|
|
|
$
|
(48
|
)
|
Asset-backed securities
|
999
|
|
|
—
|
|
|
950
|
|
|
(1
|
)
|
|
1,949
|
|
|
(1
|
)
|
U.S. government treasuries and agencies securities
|
18,246
|
|
|
(17
|
)
|
|
—
|
|
|
—
|
|
|
18,246
|
|
|
(17
|
)
|
Municipal bonds
|
1,901
|
|
|
(6
|
)
|
|
—
|
|
|
—
|
|
|
1,901
|
|
|
(6
|
)
|
International government bonds
|
—
|
|
|
—
|
|
|
1,006
|
|
|
(7
|
)
|
|
1,006
|
|
|
(7
|
)
|
Total
|
$
|
53,527
|
|
|
$
|
(63
|
)
|
|
$
|
2,680
|
|
|
$
|
(16
|
)
|
|
$
|
56,207
|
|
|
$
|
(79
|
)
|
The following table shows the gross unrealized losses and fair value of the Company’s investments with unrealized losses, as of
March 30, 2014
, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less Than 12 Months
|
|
12 Months or Greater
|
|
Total
|
(in thousands)
|
Fair
Value
|
|
Unrealized
Loss
|
|
Fair
Value
|
|
Unrealized
Loss
|
|
Fair
Value
|
|
Unrealized
Loss
|
Corporate bonds
|
$
|
52,783
|
|
|
$
|
(127
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
52,783
|
|
|
$
|
(127
|
)
|
Asset-backed securities
|
11,156
|
|
|
(9
|
)
|
|
—
|
|
|
—
|
|
|
11,156
|
|
|
(9
|
)
|
U.S. government treasuries and agencies securities
|
36,403
|
|
|
(91
|
)
|
|
—
|
|
|
—
|
|
|
36,403
|
|
|
(91
|
)
|
Municipal bonds
|
4,000
|
|
|
(18
|
)
|
|
|
|
|
|
4,000
|
|
|
(18
|
)
|
International government bonds
|
3,014
|
|
|
(9
|
)
|
|
—
|
|
|
—
|
|
|
3,014
|
|
|
(9
|
)
|
Total
|
$
|
107,356
|
|
|
$
|
(254
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
107,356
|
|
|
$
|
(254
|
)
|
Currently, a significant portion of the Company’s available-for-sale investments that it holds are high grade instruments. As of
June 29, 2014
, the unrealized losses on the Company’s available-for-sale investments represented an insignificant amount in relation to its total available-for-sale portfolio. Substantially all of the Company’s unrealized losses on its available-for-sale marketable debt instruments are primarily driven by declines in interest rates or as a result of a decrease in the market liquidity for debt instruments. Because the Company has the ability to hold these investments until a recovery of fair value, which may be maturity, the Company did not consider these investments to be other-than-temporarily impaired at
June 29, 2014
and
March 30, 2014
.
Note 6. Stock-Based Employee Compensation
Equity Incentive Programs
The Company currently issues awards under
two
equity-based plans in order to provide additional incentive and retention to directors and employees who are considered to be essential to the long-range success of the Company. These plans are further described below.
2004 Equity Plan (2004 Plan)
Options granted by the Company under the 2004 Plan generally expire
seven
years from the date of grant and generally vest over a
four
-year period from the date of grant, with one-quarter of the shares of common stock vesting on the one-year anniversary of the grant date and the remaining shares vesting monthly for the 36 months thereafter. The exercise price of the options granted by the Company under the 2004 Plan shall not be less than
100%
of the fair market value for a common share subject to such option on the date the option is granted. Full value awards made under the 2004 Plan shall become vested over a period of not less than
three
years (or, if vesting is performance-based, over a period of not less than
one
year) following the date such award is made; provided, however, that full value awards that result in the issuance of an aggregate of up to
5%
of common stock available under the 2004 Plan may be granted to any one or more participants without respect to such minimum vesting provisions. As of
June 29, 2014
, there were
11.1 million
shares available for future grant under the 2004 Plan.
Compensation Expense
The following table summarizes stock-based compensation expense by category appearing in the Company’s Condensed Consolidated Statement of Operations:
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
(in thousands)
|
June 29,
2014
|
|
June 30,
2013
|
Cost of revenue
|
$
|
316
|
|
|
$
|
333
|
|
Research and development
|
2,521
|
|
|
2,315
|
|
Selling, general and administrative
|
2,122
|
|
|
2,172
|
|
Discontinued operations
|
54
|
|
|
166
|
|
Total stock-based compensation expense
|
$
|
5,013
|
|
|
$
|
4,986
|
|
The amount of stock-based compensation expense that was capitalized during the periods presented above was not material.
Stock Options
The following is a summary of the Company's stock option activity and related weighted average exercise prices for each category:
|
|
|
|
|
|
|
|
|
Three Months Ended June 29, 2014
|
(shares in thousands)
|
Shares
|
|
Price
|
Beginning stock options outstanding
|
5,602
|
|
|
$
|
7.21
|
|
Granted
|
407
|
|
|
12.03
|
|
Exercised (1)
|
(544
|
)
|
|
7.00
|
|
Canceled
|
(195
|
)
|
|
10.26
|
|
Ending stock options outstanding
|
5,270
|
|
|
$
|
7.49
|
|
Ending stock options exercisable
|
2,978
|
|
|
$
|
6.74
|
|
|
|
(1)
|
Upon exercise, the Company issues new shares of common stock.
|
As of
June 29, 2014
, the unrecognized compensation cost related to nonvested stock options, net of estimated forfeitures, was
$2.7 million
and will be recognized over a weighted-average period of
1.28
years.
As of
June 29, 2014
, stock options vested and expected to vest totaled approximately
4.8 million
with a weighted-average exercise price of
$7.32
and a weighted-average remaining contractual life of
4.03
years. The aggregate intrinsic value was approximately
$37.9 million
.
As of
June 29, 2014
, fully vested stock options totaled approximately
3.0 million
with a weighted-average exercise price of
$6.74
and a weighted-average remaining contractual life of
3.16
years. The aggregate intrinsic value was approximately
$25.3 million
.
Restricted Stock Units
Restricted stock units granted by the Company under the 2004 Plan generally vest over at least a
three
-year period from the grant date with one-third of restricted stock units vesting on each one-year anniversary. As of
June 29, 2014
,
3.5 million
restricted stock unit awards were outstanding under the 2004 Plan.
The following table summarizes the Company's restricted stock unit activity for each category for the
three
months ended
June 29, 2014
:
|
|
|
|
|
|
|
|
|
Three Months Ended June 29, 2014
|
(shares in thousands)
|
Shares
|
|
Weighted-average grant date fair value per share
|
Beginning RSUs outstanding
|
2,923
|
|
|
$
|
7.44
|
|
Granted
|
1,555
|
|
|
12.22
|
|
Released
|
(758
|
)
|
|
7.01
|
|
Forfeited
|
(186
|
)
|
|
8.02
|
|
Ending RSUs outstanding
|
3,534
|
|
|
$
|
9.60
|
|
As of
June 29, 2014
, restricted stock units vested and expected to vest totaled approximately
2.7 million
with a weighted-average remaining contract life of
1.77
years. The aggregate intrinsic value was approximately
$40.8 million
.
As of
June 29, 2014
, the unrecognized compensation cost related to restricted stock units granted under the Company’s equity incentive plan was approximately
$18.4 million
, net of estimated forfeitures, and is expected to be recognized over a weighted-average period of
1.94
years.
Performance-Based Stock Units
Under the 2004 Plan, the Company has granted performance-based stock units which vest and convert into shares of the Company's common stock based on the level of achievement of pre-established performance goals during a specified performance period. The performance period for the Company's performance-based stock units is generally
1
to
3
years. Management evaluates, on a quarterly basis, the likelihood of the Company meeting its performance metrics in determining stock-based compensation expense.
The following table summarizes the Company's performance stock unit activity for each category for the
three
months ended
June 29, 2014
:
|
|
|
|
|
|
|
|
|
Three Months Ended June 29, 2014
|
(shares in thousands)
|
Shares
|
|
Weighted-average grant date fair value per share
|
Beginning PSUs outstanding
|
804
|
|
|
$
|
7.79
|
|
Granted
|
23
|
|
|
13.47
|
|
Released
|
(117
|
)
|
|
7.76
|
|
Forfeited
|
(71
|
)
|
|
7.66
|
|
Ending PSUs outstanding
|
639
|
|
|
$
|
8.02
|
|
As of
June 29, 2014
, performance stock units vested and expected to vest totaled approximately
0.5 million
with a weighted-average remaining contract life of
1.34
years. The aggregate intrinsic value was approximately
$7.3 million
.
As of
June 29, 2014
, the unrecognized compensation cost related to performance stock units granted under the Company’s equity incentive plan was approximately
$1.6 million
, net of estimated forfeitures, and is expected to be recognized over a weighted-average period of
1.38
years.
Market-Based Stock Units
In June 2014, under the 2004 Plan, the Company granted approximately
0.5 million
shares of restricted stock units with a market-based condition to a group of executive-level employees. These equity awards vest and convert into shares of the Company’s common stock based on the achievement of the Company’s relative total shareholder return over the performance period of two years. The earned market-based stock units will vest in two equal installments, with the first installment of vesting to occur on June 15, 2016, and the second on June 15, 2017.
The fair value of each market-based stock unit award was estimated on the date of grant using a Monte Carlo simulation model that uses the assumptions noted in the table below. The Company uses historical data to estimate employee termination within the valuation model. The expected term of
1.80
years was derived from the output of the valuation model and represents the period of time that restricted stock units granted are expected to be outstanding.
The following weighted average assumptions were used to calculate the fair value of the market-based equity award using a Monte Carlo simulation model:
|
|
|
|
|
|
June 15, 2014
|
Estimated fair value
|
$
|
21.00
|
|
Expected volatility
|
34.6
|
%
|
Expected term (in years)
|
1.80
|
|
Risk-free interest rate
|
0.38
|
%
|
Dividend yield
|
—
|
%
|
As of June 29, 2014, the total market-based stock units outstanding was approximately
0.5 million
.
As of June 29, 2014, market-based stock units vested and expected to vest totaled approximately
0.4 million
with a weighted-average remaining contract life of
2.42
years. The aggregate intrinsic value was approximately
$5.7 million
.
As of June 29, 2014, the unrecognized compensation cost related to market-based stock units granted under the Company’s equity incentive plans was approximately
$7.7 million
, net of estimated forfeitures, and is expected to be recognized over a weighted-average period of
2.46
years.
2009 Employee Stock Purchase Plan (2009 ESPP)
On June 18, 2009, the Board approved implementation of the 2009 Employee Stock Purchase Plan (2009 ESPP) and authorized the reservation and issuance of up to
9.0 million
shares of the Company's common stock, subject to stockholder approval. On September 17, 2009, the Company's stockholders approved the plan at the 2009 Annual Meeting of Stockholders. The 2009 ESPP is intended to be implemented in successive quarterly purchase periods commencing on the first day of each fiscal quarter of the Company. In order to maintain its qualified status under Section 423 of the Internal Revenue Code, the 2009 ESPP imposes certain restrictions, including the limitation that no employee is permitted to participate in the 2009 ESPP if the rights of such employee
to purchase common stock of the Company under the 2009 ESPP and all similar purchase plans of the Company or its subsidiaries would accrue at a rate which exceeds
$25,000
of the fair market value of such stock (determined at the time the right is granted) for each calendar year. At the 2012 annual meeting of stockholders on September 13, 2012, the Company's stockholders approved an additional
5.0 million
shares at the 2012 Annual meeting of Stockholders. On July 12, 2013, the Company filed a registration statement on Form S-8 with the SEC to add the shares to the 2009 ESPP. The number of shares of common stock reserved for issuance thereunder increased from
9.0 million
shares to
14.0 million
shares.
Activity under the Company's ESPP for the
three
months ended
June 29, 2014
is summarized in the following table:
|
|
|
|
|
(in thousands, except per share amounts)
|
|
Number of shares issued
|
236
|
|
Average issuance price
|
$
|
10.15
|
|
Number of shares available at June 29, 2014
|
4,783
|
|
Note 7. Stockholders' Equity
Stock Repurchase Program.
On October 22, 2013, the Company's Board increased the Company's share repurchase authorization to
$150.0 million
. In the
three
months ended
June 29, 2014
, the Company repurchased
2.4 million
shares for
$30.7 million
. As of
June 29, 2014
, approximately
$75.3 million
was available for future purchases under the share repurchase program. In fiscal 2014, the Company repurchased
4.1 million
shares for
$44.0 million
. Share repurchases were recorded as treasury stock and resulted in a reduction of stockholders’ equity.
Note 8. Balance Sheet Detail
|
|
|
|
|
|
|
|
|
(in thousands)
|
June 29,
2014
|
|
March 30,
2014
|
Inventories, net
|
|
|
|
Raw materials
|
$
|
6,059
|
|
|
$
|
7,745
|
|
Work-in-process
|
19,359
|
|
|
18,436
|
|
Finished goods
|
20,331
|
|
|
23,441
|
|
Total inventories, net
|
$
|
45,749
|
|
|
$
|
49,622
|
|
|
|
|
|
Property, plant and equipment, net
|
|
|
|
|
|
Land
|
$
|
11,765
|
|
|
$
|
11,724
|
|
Machinery and equipment
|
288,055
|
|
|
289,393
|
|
Building and leasehold improvements
|
48,716
|
|
|
48,558
|
|
Total property, plant and equipment, gross
|
348,536
|
|
|
349,675
|
|
Less: accumulated depreciation
|
(282,595
|
)
|
|
(279,848
|
)
|
Total property, plant and equipment, net (1)
|
$
|
65,941
|
|
|
$
|
69,827
|
|
|
|
|
|
|
|
|
|
|
Other accrued liabilities
|
|
|
|
Short-term portion of supplier obligations (2)
|
$
|
793
|
|
|
$
|
762
|
|
Other (3)
|
6,952
|
|
|
10,763
|
|
Total other accrued liabilities
|
$
|
7,745
|
|
|
$
|
11,525
|
|
|
|
|
|
|
|
|
|
|
Other long-term obligations
|
|
|
|
Deferred compensation related liabilities
|
$
|
14,370
|
|
|
$
|
13,786
|
|
Other
|
4,884
|
|
|
4,897
|
|
Total other long-term liabilities
|
$
|
19,254
|
|
|
$
|
18,683
|
|
(1) As of
March 30, 2014
, total property, plant and equipment, net includes the HSC business assets held for sale of
$2.9 million
. See Note 3 for additional information.
(2) Supplier obligations represent payments due under various software design tool and technology license agreements.
(3) Other current liabilities consist primarily of acquisition related accrued contingent liabilities, accrued royalties and outside commissions, accrued severance costs and other accrued unbilled expenses.
Note 9. Deferred Income on Shipments to Distributors
Included in the caption “Deferred income on shipments to distributors” on the Condensed Consolidated Balance Sheets are amounts related to shipments to certain distributors for which revenue is not recognized until our product has been sold by the distributor to an end customer
.
The components of deferred income on shipments to distributors as of
June 29, 2014
and
March 30, 2014
are as follows:
|
|
|
|
|
|
|
|
|
(in thousands)
|
June 29,
2014
|
|
March 30,
2014
|
Gross deferred revenue
|
$
|
17,194
|
|
|
$
|
17,261
|
|
Gross deferred costs
|
(3,068
|
)
|
|
(3,255
|
)
|
Deferred income on shipments to distributors
|
$
|
14,126
|
|
|
$
|
14,006
|
|
The gross deferred revenue represents the gross value of shipments to distributors at the list price billed to the distributor less any price protection credits provided to them in connection with reductions in list price while the products remain in their inventory. The amount ultimately recognized as revenue will be lower than this amount as a result of ship from stock pricing credits which are issued in connection with the sell through of the Company's products to end customers. Historically, this amount represents on average approximately
36%
of the list price billed to the customer. The gross deferred costs represent the standard costs (which approximate actual costs) of products the Company sells to the distributors. Although the Company monitors the levels and quality of inventory in the distribution channel, the Company's experience is that products returned from these distributors may be sold to a different distributor or in a different region of the world. As such, inventory write-downs for products in the distribution channel have not been significant.
Note 10. Accumulated Other Comprehensive Income (Loss)
Changes in accumulated other comprehensive income (loss) by component, net of tax, for the
three
months ended
June 29, 2014
consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands)
|
Cumulative translation adjustments
|
|
Unrealized gain on available-for-sale investments
|
|
Pension adjustments
|
|
Total
|
Balance as of March 30, 2014
|
$
|
1,497
|
|
|
$
|
194
|
|
|
$
|
(82
|
)
|
|
$
|
1,609
|
|
Other comprehensive income before reclassifications
|
330
|
|
|
452
|
|
|
—
|
|
|
782
|
|
Amounts reclassified out of accumulated other comprehensive income (loss)
|
—
|
|
|
(21
|
)
|
|
(2
|
)
|
|
(23
|
)
|
Net current-period other comprehensive income (loss)
|
330
|
|
|
431
|
|
|
(2
|
)
|
|
759
|
|
Balance as of June 29, 2014
|
$
|
1,827
|
|
|
$
|
625
|
|
|
$
|
(84
|
)
|
|
$
|
2,368
|
|
Comprehensive income components consisted of:
|
|
|
|
|
|
|
(in thousands)
|
Three Months Ended June 29, 2014
|
|
Location
|
Unrealized holding losses on available-for-sale investments
|
$
|
(21
|
)
|
|
interest and other, net
|
Amortization of pension benefits prior service credits
|
(2
|
)
|
|
operating expense
|
Total amounts reclassified out of accumulated other comprehensive income (loss)
|
$
|
(23
|
)
|
|
|
Note 11. Goodwill and Intangible Assets, Net
Goodwill balances by reportable segment as of
June 29, 2014
and
March 30, 2014
are as follows:
|
|
|
|
|
Reportable Segment
|
(in thousands)
|
Communications
|
$
|
122,248
|
|
Computing and Consumer
|
13,396
|
|
Total
|
$
|
135,644
|
|
Goodwill balances as of
June 29, 2014
and
March 30, 2014
are net of
$922.5 million
in accumulated impairment losses.
Intangible asset balances as of
June 29, 2014
and
March 30, 2014
are summarized as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 29, 2014
|
(in thousands)
|
Gross Assets
|
|
Accumulated
Amortization
|
|
Net Assets
|
Purchased intangible assets:
|
|
|
|
|
|
Existing technology
|
$
|
217,694
|
|
|
$
|
(210,168
|
)
|
|
$
|
7,526
|
|
Trademarks
|
4,411
|
|
|
(3,163
|
)
|
|
1,248
|
|
Customer relationships
|
131,045
|
|
|
(130,261
|
)
|
|
784
|
|
Non-compete agreements
|
251
|
|
|
(251
|
)
|
|
—
|
|
Total purchased intangible assets
|
$
|
353,401
|
|
|
$
|
(343,843
|
)
|
|
$
|
9,558
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 30, 2014
|
(in thousands)
|
Gross Assets
|
|
Accumulated
Amortization
|
|
Net Assets (1)
|
Purchased intangible assets:
|
|
|
|
|
|
Existing technology
|
$
|
217,923
|
|
|
$
|
(203,888
|
)
|
|
$
|
14,035
|
|
Trademarks
|
4,411
|
|
|
(2,934
|
)
|
|
1,477
|
|
Customer relationships
|
131,093
|
|
|
(128,681
|
)
|
|
2,412
|
|
Non-compete agreements
|
2,275
|
|
|
(1,458
|
)
|
|
817
|
|
Total purchased intangible assets
|
$
|
355,702
|
|
|
$
|
(336,961
|
)
|
|
$
|
18,741
|
|
(1) Includes
$6.6 million
in HSC assets held for sale.
Amortization expense for the three months ended
June 29, 2014
and
June 30, 2013
was
$2.5 million
and
$4.3 million
, respectively. During the three months ended
June 29, 2014
, the Company recorded an impairment charge relating to the HSC assets held for sale of
$5.6 million
, which consisted of existing technology of
$4.6 million
, customer relationships of
$0.9 million
and non-compete agreements of
$0.1 million
. Refer to Note 3 for additional information.
The intangible assets are being amortized over estimated useful lives of
twelve
months to
seven
years.
Based on the intangible assets recorded at
June 29, 2014
, and assuming no subsequent additions to or impairment of the underlying assets, the remaining estimated amortization expense is expected to be as follows (in thousands):
|
|
|
|
|
Fiscal Year
|
Amount
|
2015 (Remaining 9 months)
|
$
|
4,023
|
|
2016
|
3,084
|
|
2017
|
2,185
|
|
2018
|
256
|
|
2019 and thereafter
|
10
|
|
Total purchased intangible assets
|
$
|
9,558
|
|
Note 12. Restructuring
The following table shows the provision of the restructuring charges and the liability remaining as of
June 29, 2014
:
|
|
|
|
|
(in thousands)
|
Total
|
Balance as of March 30, 2014
|
$
|
638
|
|
Provision
|
378
|
|
Cash payments
|
(502
|
)
|
Balance as of June 29, 2014
|
$
|
514
|
|
During the first quarter of fiscal 2015, the Company recorded restructuring charges of
$0.4 million
and reduced headcount by
12
employees. As of
June 29, 2014
, the total accrued balance for employee severance costs related to these restructuring actions was
$0.4 million
.
During fiscal 2014, the Company recorded restructuring charges of
$5.5 million
and reduced headcount by
117
employees for multiple reductions in workforce actions. During fiscal 2014, the Company paid
$4.9 million
related to these actions. During the first quarter of fiscal 2015, the Company paid
$0.5 million
related to these actions. As of June 29, 2014, the total accrued balance for employee severance costs related to these restructuring actions was
$0.1 million
.
The Company expects to complete these restructuring actions by the second quarter of fiscal 2015.
Note 13. Commitments and Contingencies
Warranty
The Company maintains an accrual for obligations it incurs under its standard product warranty program and customer, part, or process specific matters. The Company’s standard warranty period is
one
year, however in certain instances the warranty period may be extended to as long as
two
years. Management estimates the fair value of the Company’s warranty liability based on actual past warranty claims experience, its policies regarding customer warranty returns and other estimates about the timing and disposition of product returned under the standard program. Customer, part, or process specific accruals are estimated using a specific identification method. Historical profit and loss impact related to warranty returns activity has been minimal. The total warranty accrual was
$0.4 million
and
$0.3 million
as of
June 29, 2014
and
March 30, 2014
, respectively.
Litigation
In January 2012, Maxim I Properties, a general partnership that had purchased a certain parcel of real property (the Property) in 2003, filed a complaint in the Northern District of California naming approximately 30 defendants, including the Company, alleging various environmental violations of the federal Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) and Resource Conservation and Recovery Act (RCRA), the California Hazardous Substance Account Act (HSAA), and other common law claims (the Complaint). The Complaint alleges with regard to the Company that IDT “…generated, transported, and/or arranged for the transport and/or disposal of hazardous waste to the Property.” The Complaint further alleges that the Defendants are liable for the costs of investigation and remediation of the Property due to the release of hazardous substances, and that Defendants violated their duty to prevent the release of such hazardous substances. In March 2012, the Company was served with and filed an answer to the Complaint, denying the various allegations in the Complaint. In April 2012, the Company filed an amended answer to the Complaint, including a counterclaim against the plaintiff. On August 15, 2012, the plaintiff voluntarily dismissed its Complaint against the Company without prejudice. Moyer Products, Inc., another defendant, has counter-claimed against Maxim and cross-claimed against Defendants, including the Company, and thus the Company remains a defendant in this action. In September 2012, the California Department of Toxic Substances Control (DTSC) notified the Company that it identified the Company, along with more than 50 other entities, and included the Company as a respondent to DTSC's Enforcement Order, as “a generator of hazardous waste” that was sent to the Property. In April 2013, the Company, along with the other “respondent” parties, entered into a Corrective Action Consent Agreement (CACA) to conduct the Property investigation and corrective action selection. The CACA supersedes the Enforcement Order. In February 2013, the court stayed the Maxim/Moyer litigation pending the Property investigation under the CACA and DTSC's corrective action selection. The Company will continue to vigorously defend itself against the allegations in the Complaint and evaluate settlement options with Moyer upon completion of the Property investigation and corrective action selection. Because the case is at an early stage and no specific monetary demands have been made, it is not possible for us to estimate the potential loss or range of potential losses.
The Company is also a party to various other legal proceedings and claims arising in the normal course of business. As of
June 29, 2014
, the Company has not recorded any accrual for contingent liabilities associated with its legal proceedings based on the belief that liabilities, while possible, are not probable. Further, probable losses or ranges of possible losses in these matters cannot be
reasonably estimated at this time. Generally, litigation is subject to inherent uncertainties, and no assurance can be given that the Company will prevail in any particular lawsuit. Accordingly, pending lawsuits, as well as potential future litigation with other companies, could result in substantial costs and diversion of resources and could have a material adverse effect on the Company's financial condition, results of operations or cash flows.
Note 14. Employee Benefit Plans
401(k) Plan
The Company sponsors a 401(k) retirement matching plan for qualified domestic employees. The Company recorded expenses of approximately $
0.7 million
and $
0.6 million
in matching contributions under the plan during the
three
months ended
June 29, 2014
and
June 30, 2013
, respectively.
Deferred Compensation Plans
Effective November 1, 2000, the Company established an unfunded deferred compensation plan to provide benefits to executive officers and other key employees. Under the plan, participants can defer any portion of their salary and bonus compensation into the plan and may choose from a portfolio of funds from which earnings are measured. Participant balances are always
100%
vested. As of
June 29, 2014
and
March 30, 2014
, obligations under the plan totaled approximately
$14.4 million
and
$13.8 million
, respectively. Additionally, the Company has set aside assets in a separate trust that is invested in corporate owned life insurance intended to substantially fund the liability under the plan. As of
June 29, 2014
and
March 30, 2014
, the deferred compensation plan assets were approximately
$16.1 million
.
During the first quarter of fiscal 2013, the Company assumed a deferred compensation plan associated with the acquisition of Fox. Under this plan, participants in retirement are entitled to receive a fixed amount from the Company on a monthly basis. The Company has purchased life insurance policies with the intention of funding the liability under this plan. As of
June 29, 2014
and
March 30, 2014
, the deferred compensation plan assets under this plan were approximately
$0.7 million
. As of
June 29, 2014
and
March 30, 2014
, the deferred compensation plan liabilities under this plan were approximately $
1.6 million
.
International Employee Benefit Plans
The Company sponsors defined-benefit pension plans, defined-contribution plans, multi-employer plans and other post-employment benefit plans covering employees in certain of the Company's international locations. As of
June 29, 2014
and March 30, 2014, the net liability for all of these international benefit plans totaled $
1.4 million
.
Note 15. Income Taxes
During the three months ended
June 29, 2014
, the Company recorded an income tax expense of
$0.3 million
from continuing operations. The Company recorded an income tax benefit of
$0.1 million
in the three months ended
June 30, 2013
from continuing operations. The income tax expense recorded in the three months ended
June 29, 2014
was primarily due to U.S. federal and state taxes on U.S. earnings. The income tax benefit recorded in the three months ended June 30, 2013 was primarily due to the reversal of uncertain tax positions resulting from statute lapse.
The Company continued to maintain a valuation allowance as a result of uncertainties related to the realization of its net deferred tax assets at
June 29, 2014
. The valuation allowance was established as a result of weighing all positive and negative evidence. The valuation allowance reflects the conclusion of management that it is more likely than not that benefits from certain deferred tax assets will not be realized. If actual results differ from estimates or the Company's estimates are adjusted in future periods, the valuation allowance may require adjustment which could materially impact the Company’s financial position and results of operations. It is reasonably possible that sometime in the next twelve months, positive evidence will be sufficient to release a material amount of the Company's valuation allowance; however, there is no assurance that this will occur. The required accounting for the potential release would have significant deferred tax consequences and would increase earnings in the quarter in which the allowance is released.
The Company benefits from tax incentives granted by local tax authorities in certain foreign jurisdictions. In the fourth quarter of fiscal 2011, the Company agreed with the Malaysia Industrial Development Board to enter into a new tax holiday which is a full tax exemption on statutory income for a period of
10
years commencing April 4, 2011. This tax holiday is subject to the Company meeting certain financial targets, investments, headcounts and activities in Malaysia.
The Company believes that it is reasonably possible that a decrease of up to
$2.0 million
in unrecognized tax benefits may occur within the next twelve months due to settlements with tax authorities or statute lapses.
In fiscal 2013, the Internal Revenue Service commenced a tax audit for fiscal years beginning 2011 through 2012. Although the final outcome is uncertain, based on currently available information, the Company believes that the ultimate outcome will not have a material adverse effect on its financial position, cash flows or results of operations.
As of
June 29, 2014
, the Company was subject to examination in various state and foreign jurisdictions for tax years 2007 forward, none of which were individually material.
Note 16. Segment Information
The Chief Operating Decision Maker is the Company’s President and Chief Executive Officer.
Our reportable segments include the following:
|
|
•
|
Communications segment: includes clock and timing solutions, flow-control management devices including Serial RapidIO
®
switching solutions, multi-port products, telecommunications products, high-speed static random access memory, first in and first out, digital logic, radio frequency, and MEMS Oscillator solutions.
|
|
|
•
|
Computing and Consumer segment: includes clock generation and distribution products, high-performance server memory interfaces, PCI Express switching solutions, power management solutions, signal integrity products and PC audio.
|
The tables below provide information about these segments:
|
|
|
|
|
|
|
|
|
Revenue by segment
|
Three Months Ended
|
(in thousands)
|
June 29,
2014
|
|
June 30,
2013
|
Communications
|
$
|
80,986
|
|
|
$
|
67,687
|
|
Computing and Consumer
|
45,316
|
|
|
49,777
|
|
Total revenues
|
$
|
126,302
|
|
|
$
|
117,464
|
|
|
|
|
|
|
|
|
|
|
Income (loss) by segment from continuing operations
|
Three Months Ended
|
(in thousands)
|
June 29,
2014
|
|
June 30,
2013
|
Communications
|
$
|
29,109
|
|
|
$
|
18,998
|
|
Computing and Consumer
|
(1,732
|
)
|
|
(7,998
|
)
|
Unallocated expenses:
|
|
|
|
Amortization of intangible assets
|
(2,549
|
)
|
|
(3,321
|
)
|
Assets impairment and recoveries
|
(2,302
|
)
|
|
36
|
|
Stock-based compensation expense
|
(4,959
|
)
|
|
(4,820
|
)
|
Severance, retention and facility closure costs
|
(573
|
)
|
|
(1,182
|
)
|
Acquisition-related costs and other
|
—
|
|
|
(468
|
)
|
Deferred compensation plan expense, net
|
(14
|
)
|
|
(1
|
)
|
Interest income and other, net
|
382
|
|
|
158
|
|
Income from continuing operations, before income taxes
|
$
|
17,362
|
|
|
$
|
1,402
|
|
The Company does not allocate goodwill and intangible assets impairment charge, intangible assets amortization, severance and retention costs, acquisition-related costs, stock-based compensation, deferred compensation plan expense, interest income and other, and interest expense to its segments. In addition, the Company does not allocate assets to its segments. The Company excludes these items consistent with the manner in which it internally evaluates its results of operations.
Revenues from unaffiliated customers by geographic area, based on the customers' shipment locations, were as follows:
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
(in thousands)
|
June 29,
2014
|
|
June 30,
2013
|
Asia Pacific
|
$
|
81,799
|
|
|
$
|
72,282
|
|
Americas (1)
|
17,008
|
|
|
18,646
|
|
Japan
|
10,242
|
|
|
10,101
|
|
Europe
|
17,253
|
|
|
16,435
|
|
Total revenues
|
$
|
126,302
|
|
|
$
|
117,464
|
|
|
|
(1)
|
The revenues from the customers in the U.S. were
$15.1 million
and
$16.1 million
in the three months ended
June 29, 2014
and
June 30, 2013
, respectively.
|
The Company utilizes global and regional distributors around the world, who buy product directly from the Company on behalf of their customers. No distributor accounted for 10% or more of Company's revenues in the three months ended
June 29, 2014
.
One
distributor, Avnet represented approximately
13%
of the Company’s revenues for the
three
month periods ended
June 30, 2013
.
At
June 29, 2014
,
two
distributors represented approximately
15%
and
13%
of the Company’s gross accounts receivable. At
March 30, 2014
,
four
distributors represented approximately
15%
,
15%
,
12%
and
11%
of the Company’s gross accounts receivable.
The Company’s significant operations outside of the United States include a test facility in Malaysia, design centers in Canada and China, and sales subsidiaries in Japan, Asia Pacific and Europe. The Company's property, plant and equipment, net, are summarized below by geographic area:
|
|
|
|
|
|
|
|
|
(in thousands)
|
June 29,
2014
|
|
March 30,
2014
|
United States
|
$
|
40,791
|
|
|
$
|
40,561
|
|
Canada
|
4,814
|
|
|
4,660
|
|
Malaysia
|
18,801
|
|
|
20,972
|
|
All other countries
|
1,535
|
|
|
3,634
|
|
Total property, plant and equipment, net
|
$
|
65,941
|
|
|
$
|
69,827
|
|
Note 17. Derivative Financial Instruments
As of
June 29, 2014
and
March 30, 2014
, the Company did not have any outstanding foreign currency contracts that were designated as hedges of forecasted cash flows or capital equipment purchases. The Company does not enter into derivative financial instruments for speculative or trading purposes.