EXHIBIT 99.1
IDT Reports Fiscal Q2 2006 Results; Reports Fiscal
Q2 2006 Non-GAAP EPS of $0.09, GAAP EPS of ($0.16) on Revenues of
$105.7 Million; Also Announces $25 Million Post-Merger Expansion of
Previously Authorized Share Repurchase Program
SAN JOSE, Calif.--(BUSINESS WIRE)--Nov. 8, 2005--IDT(TM)
(Integrated Device Technology, Inc.) (Nasdaq:IDTI), a leading
communications IC company, today announced results for the second
quarter of its 2006 fiscal year, ended October 2, 2005. The results
announced were in line with the revenue forecast for the company
provided on September 19, 2005, after the close of the merger with
Integrated Circuit Systems (ICS). Non-GAAP EPS for the quarter was at
the higher end of the projected range.
The following outlines the Company's financial performance on both
a GAAP and non-GAAP basis and includes ICS results for the period
subsequent to the closing of the merger on September 16, 2005 through
the end of the quarter:
-- Revenues for the second fiscal quarter were $105.7 million, an
increase of 13 percent compared to the first quarter of fiscal
2006 and an increase of 9 percent from the second quarter of
fiscal 2005.
-- Non-GAAP net income for the second quarter of fiscal 2006 was
$11.2 million or $0.09 per diluted share, compared to net
income of $5.5 million, or $0.05 per diluted share, in the
first quarter of fiscal 2006 and net income of $9.5 million,
or $0.09 per diluted share, for the same quarter one year ago.
-- GAAP net loss for the second quarter of fiscal 2006 was
$(19.5) million, or $(0.16) per diluted share, compared to net
income of $6.6 million, or $0.06 per diluted share, for the
first quarter of fiscal 2006. GAAP net income for the second
quarter of fiscal 2005 was $8.9 million, or $0.08 per diluted
share.
The GAAP results include certain costs, charges and gains in
accordance with GAAP, which are excluded from non-GAAP results since
they are not directly reflective of on-going operations. For example,
during the second quarter the Company excluded $30.7 million in net
expenses. Of this amount, $18.9 million was associated with its merger
with ICS, $8.7 million was associated with various restructuring
actions at IDT, and $3.1 million was related to other costs, primarily
associated with various other transactions, including the recently
concluded acquisition of Freescale's timing solutions business.
Reconciliation between the non-GAAP and GAAP financials is included in
the corresponding tables.
"The integration of IDT and ICS is well underway and off to a very
good start," said Greg Lang, president and CEO of IDT. "Our new
structure is complete and both the ICS and IDT businesses are running
as a unified organization. The structure we have implemented is
optimized for our strategic business segments and positions us to
achieve the projected synergies while maximizing our opportunity for
business expansion. In addition, we have already successfully taped
out the first product from ICS to be built in our fab. I'm
enthusiastic about the product and financial potential our combined
company has set out to achieve."
Status of Profitability Measures
During the past ten months, IDT has disclosed details of and began
implementing its financial restructuring measures to further improve
profitability. In January, the Company announced a reduction in force
of approximately 240 North American employees, consolidation of
certain functions, and a plan to integrate six California facilities
into a single headquarter campus located in San Jose, Calif. In April,
IDT also announced the pending closure of its assembly and test
facility in Manila, the Philippines, which would result in a reduction
in force of approximately 750 employees when completed. During the
second fiscal quarter, the Company completed most of these
restructuring plans. IDT completed the integration of its California
facilities in mid-August, with plans to consolidate the ICS San Jose
facility into the IDT headquarters within the next six months. In
addition, IDT concluded production in its Manila facility after having
transferred the Manila assembly operations to outsourced suppliers and
test operations to the Penang, Malaysia facility.
Expansion of Common Stock Repurchase Program
IDT also announced that its Board of Directors has approved a $25
million post-merger expansion of the previously authorized share
repurchase program to a total of $75 million. Under the Board's
previous stock repurchase authorization, IDT has already repurchased
approximately 2 million shares at an aggregated cost of approximately
$24 million between October 2004 and October 2005, leaving
approximately $50 million available for future repurchases.
Repurchases under the Company's stock repurchase program may be
made from time-to-time in the open market and in negotiated
transactions, including block transactions or accelerated stock
repurchase transactions, at times and at prices considered appropriate
by the Company. The expansion of the repurchase program is effective
immediately and the repurchase program may be discontinued at any
time. As of October 1, 2005 IDT had approximately 200 million shares
outstanding and approximately $268 million in cash and cash
equivalents.
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 November 8, 2005. The Webcast replay will
be available after 5 p.m. PST on November 8 through November 18, 2005.
A taped telephone replay of the conference call will be available on
November 8, 2005 beginning at 5 p.m. PST by calling (800) 475-6701 or
(320) 365-3844 and will be accessible until 11:59 p.m. PST on November
15, 2005. The access code is 798583. Investors can also listen to the
live call at 1:30 p.m. PST November 8, 2005 by calling (800) 288-8974
or (612) 332-0530.
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 semiconductor solutions for advanced
network services. IDT serves its customers by applying its advanced
processing, timing and memory technologies to create flexible, highly
integrated products that enhance the functionality and processing of
networking, computing, and consumer equipment. IDT accelerates
innovation with products such as network search engines (NSEs),
flow-control management (FCM) ICs, standards-based serial switching
and bridging devices, and leading timing solutions products. The IDT
timing solutions portfolio now integrates technologies from IDT, ICS
and Freescale, providing a comprehensive mix of devices for virtually
any advanced electronics system. In addition, the company's product
mix consists of FIFOs, multi-ports, telecommunications,
high-performance digital logic and high-speed SRAMs to meet the
requirements of leading communications companies.
Headquartered in San Jose, Calif., the company employs
approximately 2,900 people worldwide and has a wafer manufacturing
facility in Oregon, an assembly and test facility in Malaysia, a test
facility in Singapore, and design centers in China, Canada, and the
United States.
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, including
integration of both ICS and the assets we recently acquired from
Freescale, 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 year ended April 3, 2005 and Quarterly Report on Form 10-Q for
the period ended July 3, 2005.
IDT 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 Six Months Ended
- ----------------------------------------------------------------------
Oct. 2, July 3, Sep. 26, Oct. 2, Sept. 26,
2005 (a) 2005 2004 2005 (a) 2004
--------- --------- --------- --------- ---------
Revenues $105,689 $ 93,838 $ 96,671 $199,527 $197,978
Cost of revenues 67,129 51,596 48,247 118,725 96,608
Restructuring and
Asset Impairment 2,821 (451) (1,585) 2,370 (1,794)
--------- --------- --------- --------- ---------
Gross profit 35,739 42,693 50,009 78,432 103,164
--------- --------- --------- --------- ---------
Operating expenses:
Research and
development 28,081 27,456 25,449 55,537 51,450
Selling, general
and administrative 25,657 19,061 17,801 44,718 37,188
Acquired in-process
research and
development 2,500 - - 2,500 1,736
--------- --------- --------- --------- ---------
Total operating
expenses 56,238 46,517 43,250 102,755 90,374
--------- --------- --------- --------- ---------
Operating income
(loss) (20,499) (3,824) 6,759 (24,323) 12,790
Interest expense (63) (11) (26) (74) (73)
Other-than-temporary
impairment of
investments - (1,705) - (1,705) (12,831)
Interest income and
other, net 3,167 3,902 2,824 7,069 5,329
--------- --------- --------- --------- ---------
Income (loss) before
income taxes (17,395) (1,638) 9,557 (19,033) 5,215
Provision (benefit)
for income taxes 2,065 (8,218) 704 (6,153) 1,409
--------- --------- --------- --------- ---------
Net income (loss) $(19,460) $ 6,580 $ 8,853 $(12,880) $ 3,806
========= ========= ========= ========= =========
Net income (loss) per
share:
Basic $ (0.16) $ 0.06 $ 0.08 $ (0.11) $ 0.04
Diluted $ (0.16) $ 0.06 $ 0.08 $ (0.11) $ 0.03
Weighted average
shares:
Basic 124,507 106,474 106,144 115,490 106,085
Diluted 124,507 108,058 107,661 115,490 109,117
(a) The results of operations for the three and six month periods
ended October 2, 2005 contain the results of operations of ICS for
the approximate two-week period from the date of acquisition
through the end of the fiscal period.
INTEGRATED DEVICE TECHNOLOGY, INC.
NON-GAAP ADJUSTMENTS
(Unaudited)
(In thousands)
Three Months Ended Six Months Ended
- ----------------------------------------------------------------------
Oct. 2, July 3, Sept. Oct. 2 Sept.
26, 26,
2005 2005 2004 2005 2004
--------- -------- -------- --------- --------
Net income (loss) $(19,460) $ 6,580 $ 8,853 $(12,880) $ 3,806
--------- -------- -------- --------- --------
Non-GAAP adjustments:
ICS Merger Related:
Cost of goods sold:
Amortization of
acquisition-
related
intangibles (1) 6,301 - - 6,301 -
Inventory FMV
write-up (1) 4,799 - - 4,799 -
Restructuring
charges (2) 278 - - 278 -
Acquisition
related costs (3) 64 - - 64 -
Operating and Other
Expenses:
Acquired IPR&D (1) 2,500 - - 2,500
Amortization of
acquisition-
related
intangibles (1) 3,885 - - 3,885 -
Restructuring
charges (2) 168 - - 168 -
Acquisition
related costs (3) (19) - - (19) -
Loss on short-term
investments (4) 892 1,705 - 2,597
IDT Restructuring
Related:
Cost of goods sold:
Restructuring
charges (5) 119 518 - 637 25
Facility closure
costs (6) 3,580 2,252 44 5,832 239
Operating and Other
Expenses:
Restructuring
charges (5) 287 755 - 1,042 652
Facility closure
costs (6) 4,722 702 - 5,424 -
Other:
Cost of goods sold:
Asset impairment
(7) (92) (564) (1,585) (656) (1,794)
Amortization of
acquisition-
related
intangibles (8) 1,842 1,407 1,313 3,249 2,327
Inventory FMV
write-up (12) 142 - - 142 -
Patent settlement - - - - (18)
Operating and Other
Expenses:
Amortization of
acquisition-
related
intangibles (8) 419 322 364 741 902
Acquired IPR&D (8) - - - - 1,736
Acquisition
related costs (9) 462 498 494 960 1,086
Loss on equity
investments (10) - - - 12,831
Taxes (11) 342 (8,712) 18 (8,370) (10)
--------- -------- -------- --------- --------
Total Non-GAAP
adjustments 30,691 (1,117) 648 29,574 17,976
--------- -------- -------- --------- --------
Non-GAAP net income $ 11,231 $ 5,463 $ 9,501 $ 16,694 $21,782
========= ======== ======== ========= ========
(1) Consists of costs related to our acquisition of ICS in Q2 2006,
including amortization of acquired intangible assets, the FMV
adjustment of acquired inventory sold through, and acquired
in-process research and development.
(2) Consists of restructuring costs related to our acquisition of ICS
in Q2 2006, primarily composed of severance costs for IDT
employees related to the elimination of duplicative functions.
(3) Consists of additional depreciation and above market rental costs
resulting from purchase accounting and retention costs incurred in
connection with the acquisition of ICS in Q2 2006.
(4) Consists of other-than-temporary impairment charges and losses on
the sale of securities incurred primarily as a result of our
acquisition of ICS.
(5) Consists of costs related to restructuring actions initiated in Q1
2006 and Q4 2005, all of which consist of severance and retention.
(6) Q2 2006 and Q1 2006 consists of cost associated with the exit of
our leased facilities in Salinas and Santa Clara and severance and
retention payments associated with the closure of our Manila
facility. Q2 2005 consists of costs associated with the closure of
our Salinas facility.
(7) Consists of gains realized on the sale of assets related to our
Salinas facility, which were previously impaired.
(8) Consists of costs related to our acquisition of assets from
Freescale in Q2 2006, 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.
Others include only amortization of intangible assets.
(9) Q2 2006 consists of retention costs incurred in connection with
the acquisition of assets from Freescale in Q2 2006 and ZettaCom
in Q1 2005, such as retention earned by former employees, rent
payments for the former ZettaCom facility, and transitional
services provided.
(10) Consists of an impairment charge taken in Q1 2005 related to our
investment in NetLogic.
(11) Q2 2006 consists of the tax effects of non-GAAP adjustments. Q1
2006 also consists of a net reduction in income taxes as a result
of a partial settlements with the IRS.
(12) Consists of the FMV adjustment of acquired inventory sold through
in conjunction with our acquisition of Freescale assets in Q2
2006.
INTEGRATED DEVICE TECHNOLOGY, INC.
NON-GAAP STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share data)
Three Months Ended Six Months Ended
- ----------------------------------------------------------------------
Oct. 2, July 3, Sep. 26, Oct. 2, Sep. 26,
2005 2005 2004 2005 2004
--------- --------- --------- --------- ---------
Revenues $105,689 $ 93,838 $ 96,671 $199,527 $197,978
Cost of Revenues 52,917 47,532 46,890 100,449 94,035
--------- --------- --------- --------- ---------
Gross profit 52,772 46,306 49,781 99,078 103,943
--------- --------- --------- --------- ---------
Operating expenses:
Research and
development 25,283 26,196 24,775 51,479 49,725
Selling, general
and administrative 18,531 18,044 17,617 36,575 36,273
--------- --------- --------- --------- ---------
Total operating
expenses 43,814 44,240 42,392 88,054 85,998
--------- --------- --------- --------- ---------
Operating income 8,958 2,066 7,389 11,024 17,945
Interest expense (63) (11) (26) (74) (73)
Interest income and
other, net 4,059 3,902 2,824 7,961 5,329
--------- --------- --------- --------- ---------
Income before income
taxes 12,954 5,957 10,187 18,911 23,201
Provision for income
taxes 1,723 494 686 2,217 1,419
--------- --------- --------- --------- ---------
Net income $ 11,231 $ 5,463 $ 9,501 $ 16,694 $ 21,782
========= ========= ========= ========= =========
Net income per share:
Diluted $ 0.09 $ 0.05 $ 0.09 $ 0.14 $ 0.20
Weighted average
shares:
Diluted 125,057 108,058 107,661 116,537 109,117
Non-GAAP results exclude acquisition-related charges, and other
expenses and benefits that management believes are not directly
reflective of 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)
Oct. 2, Apr. 3,
(In thousands) 2005 2005
- ------------------------------------------------ ----------- ---------
ASSETS
Current assets:
Cash and cash equivalents $ 177,535 $188,761
Short-term investments 90,193 392,472
-
Accounts receivable, net 79,972 52,948
Inventories, net 60,920 37,331
Prepaids and other current assets 13,490 11,292
----------- ---------
Total current assets 422,110 682,804
Property, plant and equipment, net 136,007 124,570
Goodwill 998,369 55,523
Acquisition-related intangibles 545,720 29,812
Other assets 19,681 9,431
----------- ---------
TOTAL ASSETS $2,121,887 $902,140
=========== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 38,187 $ 18,726
Accrued compensation and related expenses 17,193 15,293
Deferred income on shipments to distributors 20,274 19,478
Income taxes payable 23,446 25,722
Other accrued liabilities 34,602 20,206
----------- ---------
Total current liabilities 133,702 99,425
Deferred tax liabilities 18,265 -
Long term liabilities 17,163 15,599
----------- ---------
Total liabilities 169,130 115,024
Stockholders' equity 1,952,757 787,116
----------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $2,121,887 $902,140
=========== =========
CONTACT: Integrated Device Technology, Inc.
Dawn Morse, 408-284-6515 (Investor Relations)
dawn.morse@idt.com
Phil Bourekas, 408-284-8200 (Press)
phil.bourekas@idt.com
or
Porter Novelli
Brad Langley, 408-369-4600 ext. 636 (Press)
brad.langley@porternovelli.com