Exhibit 99.1
IDT Reports Earnings for the Third Quarter of Fiscal Year 2005;
Company reports $0.06 Non GAAP EPS, $0.03 GAAP EPS on Revenue of $95.7 Million;
Announces Restructuring Activity
SANTA CLARA, Calif.--(BUSINESS WIRE)--Jan. 26, 2005--IDT(TM) (Integrated
Device Technology, Inc.)(Nasdaq:IDTI), a leading communications IC company,
today announced its results for the quarter ended January 2, 2005, its third
quarter of fiscal 2005. The Company also disclosed details of restructuring
efforts designed to reduce manufacturing and operating costs.
Revenues for the third fiscal quarter were $95.7 million, a decrease of 1
percent compared to the second quarter of fiscal 2005 and an increase of 9.8
percent from the third quarter of fiscal 2004. On a non-GAAP basis, net income
for the third fiscal quarter was $6.3 million, or $0.06 per diluted share,
compared to net income of $9.5 million, or $0.09 per diluted share, in the
second quarter of fiscal 2005 and net income of $4.0 million, or $0.04 per
diluted share, for the same quarter one year ago.
Including certain costs, charges and gains in accordance with GAAP, the
Company reported net income of $3.3 million, or $0.03 per diluted share, in the
third quarter of fiscal 2005 compared to net income of $8.9 million, or $0.08
per diluted share, in the second quarter of fiscal 2005. On a GAAP basis, the
Company reported net income of $2.3 million, or $0.02 per diluted share, for the
third quarter of fiscal 2004. The second fiscal quarter of 2005 GAAP results
include a $1.6 million gain on the sale of assets related to discontinued wafer
operations in Salinas, Calif. Further information, including a detailed
reconciliation of non-GAAP to GAAP results, is provided in the financial tables
of this release. Also, as previously announced in October 2004, the IDT Board of
Directors authorized the repurchase of up to $50 million of its Common Stock on
the open market. Through the date of this release, the Company has repurchased
shares totaling approximately $24 million dollars.
"As we anticipated, the December quarter was difficult," said Greg Lang,
president and CEO of IDT. "However, our investments in new markets, notably PC
motherboard and DIMM timing solutions, have helped to mitigate the effects of
customer inventory issues and the softness in the wireless infrastructure
market. Given the environment, we are pleased with last quarter's results and
are implementing activities that will enable us to further strengthen our
financial performance."
Profitability Measures
In response to the current business environment, IDT began a restructuring
program designed to reduce manufacturing and operating costs in order to improve
profitability. These measures include the consolidation of the Company's
Northern California operations, including Salinas operations, into its new San
Jose-based corporate headquarters, enabling an estimated $4 million annual
operating-cost savings. In addition, IDT is centralizing and otherwise
streamlining a number of manufacturing support, sales, IT and R&D positions.
Overall, this reduction in force will result in the elimination of approximately
240 positions in North America, with roughly 50 percent implemented as of today,
while the balance will be transitioned over the next few quarters.
In time, the combined effects of these measures are projected to save
approximately $5 to $6 million per quarter through the Company's non-GAAP P&L.
Approximately 20 percent of these cost savings are in R&D, with the bulk of the
savings split between cost-of-sales and SG&A. The Company projects one-time
costs of approximately $17 million associated with this consolidation and
restructuring, which will be implemented over the next twelve months.
"While the actions we are taking are quite painful, we need to ensure that
our resources are dedicated to those areas that will best drive a healthy future
for our company," said Lang. "We remain optimistic about the communications
infrastructure markets, our portfolio of leading-edge products, and our ability
to produce strong financial results over the next year."
Webcast and Conference Call Information
Investors can listen to a live or replay Webcast of the Company's quarterly
financial conference call at www.IDT.com. The live Webcast begins at 1:30 p.m.
PST on Wednesday, January 26, 2005. The Webcast replay will be available after 5
p.m. PST on January 26 through February 17, 2005. A taped telephone replay of
the conference call will be available on January 26, 2005 beginning at 6 p.m.
PST by calling (800) 475-6701 or (320) 365-3844 and will be accessible until
11:59 p.m. PST on February 2, 2005. The access code is 764800.
Investor Information
IDT stock is traded on the Nasdaq Stock Market(R) under the symbol "IDTI."
The Company is included in the S&P 1000, which is a combination of the S&P
MidCap 400 and S&P SmallCap 600 Indices, and is also part of the S&P
SuperComposite 1500, which combines the S&P 500, MidCap 400, and SmallCap 600.
Additional information about IDT is accessible at www.IDT.com.
About IDT
IDT is a global leader in preemptive semiconductor solutions that
accelerate packet processing for advanced network services. IDT serves
communications equipment vendors by applying its advanced hardware and software
technologies to create flexible, highly integrated solutions that enhance the
functionality and processing of network equipment. IDT accelerates intelligent
packet processing with products such as switching solutions, network search
engines (NSEs), programmable content inspection engines (CIEs), flow-control
management (FCM) ICs and its family of Interprise(TM) integrated communications
processors. The portfolio also comprises products optimized for communications
applications, including telecom products, FIFOs, multi-ports, and timing
solutions. In addition, the product mix includes high-performance digital logic
and high-speed SRAMs to meet the requirements of leading communications
companies.
Currently headquartered in Santa Clara, Calif., the Company employs
approximately 3,000 people worldwide and has a wafer manufacturing facility in
Oregon, and test and assembly facilities in the Philippines and Malaysia.
Additional information about IDT is accessible at www.IDT.com.
Investors are cautioned that forward-looking statements in this release
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 supply 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. We urge 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 year ended
March 28, 2004, and the Quarterly Report on Form 10-Q for the quarter ended
September 26, 2004.
IDT, Interprise and the IDT logo are 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 Nine Months Ended
- ----------------------------------------------------------------------
Jan. 2, Sep. 26, Dec. 28, Jan. 2, Dec. 28,
2005 2004 2003 2005 2003
-------- -------- -------- --------- ---------
Revenues $95,658 $96,671 $87,100 $293,636 $250,922
Cost of revenues 49,833 48,247 45,625 146,441 136,550
Restructuring and asset
impairment 213 (1,585) - (1,581) -
-------- -------- -------- --------- ---------
Gross profit 45,612 50,009 41,475 148,776 114,372
-------- -------- -------- --------- ---------
Operating expenses:
Research and
development 26,365 25,449 23,607 77,815 74,689
Selling, general and
administrative 18,291 17,801 17,888 55,479 54,533
Acquired in-process
research
and development 29 - - 1,765 264
-------- -------- -------- --------- ---------
Total operating
expenses 44,685 43,250 41,495 135,059 129,486
-------- -------- -------- --------- ---------
Operating income (loss) 927 6,759 (20) 13,717 (15,114)
Interest expense (13) (26) (69) (86) (279)
Gain (loss) on equity
investments - - - (12,831) 3,151
Interest income and
other, net 3,657 2,824 2,787 8,986 10,153
-------- -------- -------- --------- ---------
Income (loss) before
income taxes 4,571 9,557 2,698 9,786 (2,089)
Provision (benefit) for
income taxes 1,223 704 358 2,632 (827)
-------- -------- -------- --------- ---------
Net income (loss) $3,348 $8,853 $2,340 $7,154 $(1,262)
======== ======== ======== ========= =========
Net income (loss) per
share:
Basic $0.03 $0.08 $0.02 $0.07 $(0.01)
Diluted $0.03 $0.08 $0.02 $0.07 $(0.01)
Weighted average shares:
Basic 105,806 106,144 104,915 105,992 104,332
Diluted 107,444 107,661 108,360 108,544 104,332
INTEGRATED DEVICE TECHNOLOGY, INC.
NON-GAAP ADJUSTMENTS
(Unaudited)
(In thousands)
Three Months Ended Nine Months Ended
- ----------------------------------------------------------------------
Jan. 2, Sep. 26, Dec. 28, Jan. 2, Dec. 28,
2005 2004 2003 2005 2003
-------- -------- -------- -------- --------
Net income (loss) $3,348 $8,853 $2,340 $7,154 $(1,262)
-------- -------- -------- -------- --------
Non-GAAP adjustments:
Cost of goods sold:
Restructuring charges(1) 322 - - 347 15
Asset Impairment(2) (109) (1,585) - (1,903) -
Plant closure costs(2) 33 44 269 272 831
Amortization of
acquisition-related
intangibles(3) 1,626 1,313 603 3,953 1,194
Patent Settlement - - - (18) -
Operating expenses:
Acquired IPR&D(3) 29 - - 1,765 264
Plant closure costs(2) - - - - 36
Restructuring charges(1) 98 - 227 750 1,520
Amortization of
acquisition-
related intangibles(3) 421 364 517 1,323 1,453
Acquisition related
costs(4) 507 494 - 1,593 -
(Gain) Loss on equity
investments(5) - - - 12,831 (3,151)
Other income(6) - - 108 - (794)
Taxes(6) (21) 18 (108) (31) (2,038)
-------- -------- -------- -------- --------
Total Non-GAAP
adjustments 2,906 648 1,616 20,882 (670)
-------- -------- -------- -------- --------
Non-GAAP net income
(loss) $6,254 $9,501 $3,956 $28,036 $(1,932)
======== ======== ======== ======== ========
(1) Consists of costs for restructuring actions announced in fiscal
years 2004-2005, primarily related to severance.
(2) Consists of costs associated with the closure of our Salinas plant
and gains realized on the sale of related assets held for sale.
(3) Consists of costs related to our acquisition of Zettacom in Q1
2005, TCAM3 acquisition from IBM in Q2 2004 and acquisitions of
Newave and Solidum in Q1 2002 and Q3 2003, respectively.
Newave-related costs include stock-based compensation and
amortization of intangible assets. Zettacom, TCAM3 and
Solidum-related costs include only amortization of intangible
assets.
(4) Consists primarily of transitional costs incurred in connection
with the acquisition of Zettacom, such as retention earned by
former Zettacom employees, rent payments for the former Zettacom
facility, and transitional services provided.
(5) Consists of an impairment charge related to our investment in
NetLogic in Q1 2005 and a gain on the sale of our investment in
PMC Sierra in Q2 2004.
(6) In Q1 and Q2 2004, we received non-recurring federal and state tax
refunds for tax years prior to 1996 plus interest.
INTEGRATED DEVICE TECHNOLOGY, INC.
NON-GAAP STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except
per share data)
Three Months Ended Nine Months Ended
- ----------------------------------------------------------------------
Jan. 2, Sep. 26, Dec. 28, Jan. 2, Dec. 28,
2005 2004 2003 2005 2003
---------- -------- -------- --------- ---------
Revenues $95,658 $96,671 $87,100 $293,636 $250,922
Cost of Revenues 48,174 46,890 44,753 142,209 134,510
---------- -------- -------- --------- ---------
Gross profit 47,484 49,781 42,347 151,427 116,412
---------- -------- -------- --------- ---------
Operating expenses:
Research and
development 25,596 24,775 23,210 75,321 73,063
Selling, general and
administrative 18,034 17,617 17,541 54,307 53,150
---------- -------- -------- --------- ---------
Total operating
expenses 43,630 42,392 40,751 129,628 126,213
---------- -------- -------- --------- ---------
Operating income (loss) 3,854 7,389 1,596 21,799 (9,801)
Interest expense (13) (26) (69) (86) (279)
Interest income and
other, net 3,657 2,824 2,895 8,986 9,359
---------- -------- -------- --------- ---------
Income (loss) before
income taxes 7,498 10,187 4,422 30,699 (721)
Provision for income
taxes 1,244 686 466 2,663 1,211
---------- -------- -------- --------- ---------
Net income (loss) $6,254 $9,501 $3,956 $28,036 $(1,932)
========== ======== ======== ========= =========
Net income (loss) per
share:
Diluted $0.06 $0.09 $0.04 $0.26 $(0.02)
Weighted average
shares:
Diluted 107,444 107,661 108,360 108,544 104,332
Non-GAAP results exclude acquisition-related charges, and other
expenses and benefits that management believes are not directly
related to our ongoing operations. These non-GAAP results are
consistent with another way management internally analyzes IDT's
results and may be useful; however, 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.
INTEGRATED DEVICE TECHNOLOGY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
Jan. 2, Mar. 28,
(In thousands) 2005 2004
- ----------------------------------------------------------------------
ASSETS
Current assets:
Cash and cash equivalents $247,392 $223,360
Short-term investments 342,374 384,854
Accounts receivable, net 50,115 53,091
Inventories 44,425 32,745
Prepaids and other current assets 11,431 12,101
--------- ---------
Total current assets 695,737 706,151
Property, plant and equipment, net 105,455 108,424
Goodwill and other intangibles 86,558 52,784
Other assets 9,170 38,194
--------- ---------
TOTAL ASSETS $896,920 $905,553
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $23,289 $20,190
Accrued compensation and related expenses 15,170 11,560
Deferred income on shipments to distributors 19,783 21,411
Income taxes payable 33,743 33,267
Other accrued liabilities 19,135 19,250
--------- ---------
Total current liabilities 111,120 105,678
Long term liabilities 12,903 15,651
--------- ---------
Total liablities 124,023 121,329
Stockholders' equity 772,897 784,224
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $896,920 $905,553
========= =========
CONTACT: IDT
Dawn Morse, 408-654-6515 (Investor Relations)
dawn.morse@idt.com
Phil Bourekas, 408-727-6116 (Worldwide Marketing)
phil.bourekas@idt.com
or
Porter Novelli
Brad Langley, 408-369-1500
brad.langley@porternovelli.com