FOR IMMEDIATE RELEASE
Financial Contact: Mike Knapp IDT Investor Relations Phone: (408) 284-6515 E-mail: mike.knapp@idt.com | Press Contact: Graham Robertson IDT Worldwide Marketing Phone: (408) 284-2644 E-mail: graham.robertson@idt.com |
IDT REPORTS FISCAL Q2 2011 FINANCIAL RESULTS
Revenue up 5 Percent Q/Q to $166.9 Million
GAAP Gross Margin Reaches 10-Year High
GAAP EPS of $0.13; Non-GAAP EPS of $0.19
Generated Approximately $40 Million in Cash from Operations
SAN JOSE, Calif., Oct. 25, 2010 — Integrated Device Technology, Inc. (IDT®) (NASDAQ: IDTI), the Analog and Digital Company™ delivering essential mixed-signal semiconductor solutions, today announced results for the fiscal second quarter ended September 26, 2010.
“I’m pleased to report another strong quarter of financial performance in Q2, which validates our strategy and highlights the significant leverage in our operating model,” said Dr. Ted Tewksbury, president and CEO of IDT. “We delivered 22 percent sequential growth in new products while increasing sales in our core communications timing, consumer timing and DDR3 memory interface businesses. Our deliberate efforts to shift the mix to higher value-added products enabled gross margins to reach their highest level in 10 years. This gross margin improvement, combined with continued operating expense control, resulted in operating margins well above our target model. In fact, during the quarter, more than 95 cents of every incremental sales dollar dropped to operating profi t. While we face weaker demand from customers in the computing and consumer end markets in the December quarter, our exceptional execution in Q2 exemplifies the solid returns that our operating model can deliver over the long run.”
Recent Highlights
IDT recently announced:
| · | That it demonstrated the industry's first Enterprise Non-Volatile Memory Host Controller Interface (NVMHCI)-based flash controller at the Flash Memory Summit |
| · | The industry’s most accurate all-silicon CMOS oscillator, which achieves an industry-leading 100ppm total frequency error across temperature, voltage and other factors |
| · | The industry's first single-chip power management solution for thin film transistor (TFT) Liquid Crystal Display (LCD) panels |
| · | The world’s first DisplayPort™-based device that allows users to connect up to four monitors to a single DisplayPort connection |
| · | The world’s first family of high-definition PC audio codecs to feature the DDX™-based class-D modulation technology |
| · | The HQV® VidaTM processor was selected for use in the new Yamaha AVENTAGE audio/video receiver |
| · | Delivery of voltage regulator modules (VRMs) to SGI® to power Altix® UV, the world's fastest supercomputer |
| · | That its PCI Express® (PCIe®)-to-PCI bridge has been selected by MiTAC International Corporation for use in its next-generation desktop motherboard |
“Our system-level approach — combining analog and power management with our core expertise in timing, serial switching and memory interfaces — has enabled us to expand our content in customers’ applications. The profusion of new products being introduced by our business units capitalize on long-term secular growth drivers, including 4G/LTE wireless infrastructure, cloud computing, video delivery through IP networks, and the proliferation of portable consumer devices.” Tewksbury continued.
The following highlights the Company’s financial performance on both a GAAP and non-GAAP basis. The GAAP results include certain costs, charges, gains and losses, which are excluded from non-GAAP results based on management’s determination that they are not directly reflective of on-going operations. Non-GAAP results are not in accordance with GAAP and may not be comparable to non-GAAP information provided by other companies. Non-GAAP information should be considered a supplement to, and not a substitute for, financial statements prepared in accordance with GAAP. A complete reconciliation of GAAP to non-GAAP results is attached to this press release.
| · | Revenue for the fiscal second quarter of 2011 was $166.9 million, up 20 percent from $139.5 million reported in the same period one year ago. |
| · | GAAP net income for the fiscal second quarter of 2011 was $20.2 million or $0.13 per diluted share, versus GAAP net income of $60.5 million or $0.36 per diluted share in the same period one year ago, which included an $82.7 million gain associated with the divestiture of the Network Search Engine business. Fiscal second quarter 2011 GAAP results include $5.4 million in acquisition and divestiture related charges, $4.0 million in stock-based compensation and $1.5 million in restructuring-related costs. |
| · | Non-GAAP net income for the fiscal second quarter of 2011 was $30.4 million or $0.19 per diluted share, compared with non-GAAP net income of $12.2 million or $0.07 per diluted share reported in the same period one year ago. |
| · | GAAP gross profit for the fiscal second quarter of 2011 was $90.3 million, or 54.1 percent, compared with GAAP gross profit of $51.1 million, or 36.6 percent, in the same period one year ago. Non-GAAP gross profit for the fiscal second quarter of 2010 was $95.7 million, or 57.3 percent, compared with non-GAAP gross profit of $70.2 million, or 50.3 percent, reported in the same period one year ago. |
| · | GAAP R&D expense for the fiscal second quarter of 2011 was $44.0 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 second quarter of 2011 was $40.8 million, compared with non-GAAP R&D of $35.9 million in the same period one year ago. |
| ● | GAAP SG&A expense for the fiscal second quarter of 2011 was $26.8 million, compared with GAAP SG&A expense of $30.7 million in the same period one year ago. Non-GAAP SG&A expense for the fiscal second quarter of 2011 was $23.9 million, compared with non-GAAP SG&A expense of $21.9 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://www.IDT.com. The live webcast will begin at 1:30 p.m. Pacific time on October 25, 2010. The webcast replay will be available after 5 p.m. Pacific time on October 25, 2010.
Investors can also listen to the live call at 1:30 p.m. Pacific time on October 25, 2010 by calling (800) 700-7414 or (612) 332-0806. The conference call replay will be available after 5 p.m. Pacific time on October 25, 2010 through 11:59 p.m. Pacific time on November 1, 2010 at (800) 475-6701 or (320) 365-3844. The access code is 173261.
About IDT
Integrated Device Technology, Inc., the Analog and Digital Company™, combines analog and digital technology to develop system-level innovations that optimize customers’ applications and enrich the end-user experience. 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 and sales facilities throughout the world. IDT stock is traded on the NASDAQ Global Select Stock Market® under the symbol “IDTI.” Additional information about IDT is accessible at www.IDT.com. Follow IDT on Twitter and Facebook.
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 28, 2010. All forward-looking statements are made as of the date of this release and the Company disclaims any duty to update such statements.
Non-GAAP Reporting
The Company presents non-GAAP financial measures because the 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 restructuring-related costs, acquisition and divestiture-related charges, share-based compensation expense and certain other expenses and benefits. Management uses these non-GAAP measures to manage and assess the profitability of the business. These non-GAAP results are also consistent with another way management internally analyzes IDT’s results and may be useful to investor community. The Company has reconciled non-GAAP results to the most directly comparable GAAP financial measures in the financial tables at the end of this press release.
Reference to these non-GAAP results should be considered in addition to results that are prepared under general accepted accounting standards in the United States (GAAP), but should not be considered a substitute for results that are presented in accordance with GAAP. It should also be noted that IDT's non-GAAP information may be different from the non-GAAP information provided by other companies.
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IDT, HQV, VersaClock, ViewXpand and the IDT logo are trademarks or registered trademarks of Integrated Device Technology, Inc. All other brands, product names and marks are or may be trademarks or registered trademarks used to identify products or services of their respective owners.
INTEGRATED DEVICE TECHNOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited; in thousands, except per share data)
| | | Three Months Ended | | | Six Months Ended | |
| | | Sept. 26, | | | June 27, | | | Sept. 27, | | | Sept. 26, | | | Sept. 27, | |
| | | 2010 | | | 2010 | | | 2009 | | | 2010 | | | 2009 | |
| Revenues | | $ | 166,907 | | | $ | 158,273 | | | $ | 139,504 | | | $ | 325,180 | | | | 255,458 | |
| Cost of revenues | | | 76,613 | | | | 76,107 | | | | 88,373 | | | | 152,720 | | | | 157,162 | |
| Gross profit | | | 90,294 | | | | 82,166 | | | | 51,131 | | | | 172,460 | | | | 98,296 | |
| Operating expenses: | | | | | | | | | | | | | | | | | | | | |
| Research and development | | | 43,986 | | | | 43,736 | | | | 41,455 | | | | 87,722 | | | | 77,770 | |
| Selling, general and administrative | | | 26,841 | | | | 27,358 | | | | 30,662 | | | | 54,199 | | | | 56,097 | |
| Total operating expenses | | | 70,827 | | | | 71,094 | | | | 72,117 | | | | 141,921 | | | | 133,867 | |
| | | | | | | | | | | | | | | | | | | | | |
| Operating income (loss) | | | 19,467 | | | | 11,072 | | | | (20,986 | ) | | | 30,539 | | | | (35,571 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| Gain on divestitures | | | - | | | | - | | | | 82,747 | | | | - | | | | 82,747 | |
| Interest income and other, net | | | 1,183 | | | | 275 | | | | 1,199 | | | | 1,458 | | | | 2,624 | |
| Interest expense | | | (6 | ) | | | (11 | ) | | | (11 | ) | | | (17 | ) | | | (30 | ) |
| Income before income taxes | | | 20,644 | | | | 11,336 | | | | 62,949 | | | | 31,980 | | | | 49,770 | |
| Provision for income taxes | | | 420 | | | | 923 | | | | 2,409 | | | | 1,343 | | | | 3,351 | |
| | | | | | | | | | | | | | | | | | | | | |
| Net income | | $ | 20,224 | | | $ | 10,413 | | | $ | 60,540 | | | $ | 30,637 | | | | 46,419 | |
| | | | | | | | | | | | | | | | | | | | | |
| Basic net income per share | | $ | 0.13 | | | $ | 0.06 | | | $ | 0.37 | | | $ | 0.19 | | | $ | 0.28 | |
| Diluted net income per share | | $ | 0.13 | | | $ | 0.06 | | | $ | 0.36 | | | $ | 0.19 | | | $ | 0.28 | |
| | | | | | | | | | | | | | | | | | | | | |
| Weighted average shares: | | | | | | | | | | | | | | | | | | | | |
| Basic | | | 157,021 | | | | 161,659 | | | | 165,591 | | | | 159,340 | | | | 165,511 | |
| Diluted | | | 157,649 | | | | 162,577 | | | | 166,075 | | | | 160,171 | | | | 165,853 | |
INTEGRATED DEVICE TECHNOLOGY, INC.
