Exhibit 99.1
IDT Reports Fiscal Q3 2006 Results; Revenue Growth
and EPS at High End of Company's Forecast
SAN JOSE, Calif.--(BUSINESS WIRE)--Jan. 26, 2006--IDT(TM)
(Integrated Device Technology, Inc.)(Nasdaq: IDTI), a vital
semiconductor solutions supplier, today announced results for the
third quarter of its 2006 fiscal year, ended January 1, 2006. The
Company's revenues and non-GAAP EPS for the quarter were at the high
end of the Company's projections provided on the second quarter
earnings call on November 8, 2005. These results reflect the first
full quarter of results for the combined company following the
Company's merger with Integrated Circuit Systems (ICS), as well as
growth in the Company's end markets.
The following highlights the Company's financial performance on
both a GAAP and non-GAAP basis. The GAAP results include certain
costs, charges and gains in accordance with GAAP, which are excluded
from non-GAAP results based on management's determination that they
are not directly reflective of on-going operations.
-- Revenues for the fiscal third quarter were $160.8 million, an
increase of 52 percent compared to the second quarter of
fiscal 2006, and an increase of 68 percent from the third
quarter of fiscal 2005.
-- Non-GAAP net income for the third quarter of fiscal 2006 was
$27.8 million or $0.14 per diluted share, compared to net
income of $11.2 million or $0.09 per diluted share in the
second quarter of fiscal 2006. Non-GAAP net income for the
third quarter of fiscal 2005 was $6.3 million, or $0.06 per
diluted share.
-- GAAP net loss for the third quarter was $42.3 million, or a
loss of $0.21 per diluted share. This compares to a net loss
of $19.5 million, or a loss of $0.16 per diluted share, for
the second quarter of fiscal 2006. GAAP net income for the
third quarter of fiscal 2005 was $3.3 million, or $0.03 per
diluted share. Third quarter of fiscal 2006 GAAP results
include $64.8 million of acquisition related charges
(including $56.8 million in intangibles amortization), $4.1
million in taxes related to foreign earnings repatriation
under the Homeland Investment Act (HIA) and $0.6 million in
restructuring related charges. For further description and a
complete reconciliation of GAAP to non-GAAP adjustments,
please refer to the attached tables.
"We are very pleased with our financial performance for the third
quarter," said Greg Lang, president and CEO of IDT. "Strong customer
demand for our products serving the PC and communications end markets,
particularly in the enterprise sub-segment, enabled us to deliver
results at the high end of our forecast. Our integration of ICS is on
track and we are beginning to realize synergies relating to this
merger. Our profitability in the third quarter reflects the benefits
of the merger integration as well as our own restructuring plans."
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. PST on January 26, 2006. The webcast
replay will be available after 5 p.m. PST on January 26 through
February 2, 2006.
Investors can also listen to the live call at 1:30 p.m. PST
January 26, 2006 by calling (888) 423-3271 or (612) 332-0530. The
conference call replay will be available after 5 p.m. PST on January
26 through 11:59 p.m. PST on February 2, 2006 at (800) 475-6701 or
(320) 365-3844. The access code is 811507.
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 world leader in developing and delivering vital
semiconductor solutions that enable customers to accelerate
innovation. IDT solutions help customers solve complex system design
challenges associated with the evolving requirements of
communications, computing and consumer applications. By leveraging its
system knowledge and extensive blend of technologies, IDT is able to
deliver essential solutions, including timing products, network search
engines, flow-control management ICs and products for standards-based
serial switching. Headquartered in San Jose, Calif., IDT has design,
manufacturing and sales facilities throughout the world.
Forward Looking Statements
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 October 2, 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 Nine Months Ended
- ----------------------------------------------------------------------
Jan. 1, Oct. 2, Jan. 2, Jan. 1, Jan. 2,
2006 (a) 2005 (a) 2005 2006 (a) 2005
--------- --------- -------- --------- ---------
Revenues $160,792 $105,689 $95,658 $360,319 $293,636
Cost of revenues 115,358 67,129 49,833 234,083 146,441
Restructuring and
Asset Impairment (164) 2,821 213 2,206 (1,581)
--------- --------- -------- --------- ---------
Gross profit 45,598 35,739 45,612 124,030 148,776
--------- --------- -------- --------- ---------
Operating expenses:
Research and
development 36,229 28,081 26,365 91,766 77,815
Selling, general and
administrative 47,844 25,657 18,291 92,562 55,479
Acquired in-process
research and
development (200) 2,500 29 2,300 1,765
--------- --------- -------- --------- ---------
Total operating
expenses 83,873 56,238 44,685 186,628 135,059
--------- --------- -------- --------- ---------
Operating income
(loss) (38,275) (20,499) 927 (62,598) 13,717
Interest expense (61) (63) (13) (135) (86)
Other-than-temporary
impairment of
investments -- -- -- (1,705) (12,831)
Interest income and
other, net 3,005 3,167 3,657 10,074 8,986
--------- --------- -------- --------- ---------
Income (loss) before
income taxes (35,331) (17,395) 4,571 (54,364) 9,786
Provision for income
taxes 6,957 2,065 1,223 804 2,632
--------- --------- -------- --------- ---------
Net income (loss) $(42,288) $(19,460) $ 3,348 $(55,168) $ 7,154
========= ========= ======== ========= =========
Net income (loss)
per share:
Basic $ (0.21) $ (0.16) $ 0.03 $ (0.38) $ 0.07
Diluted $ (0.21) $ (0.16) $ 0.03 $ (0.38) $ 0.07
Weighted average
shares:
Basic 199,568 124,507 105,806 143,516 105,992
Diluted 199,568 124,507 107,444 143,516 108,544
(a) The results of operations include the results of operations of
ICS from September 16, 2005, the date of acquisition.
INTEGRATED DEVICE TECHNOLOGY, INC.
NON-GAAP ADJUSTMENTS
(Unaudited)
(In thousands)
Three Months Ended Nine Months Ended
- ----------------------------------------------------------------------
Jan. 1, Oct. 2, Jan. 2, Jan. 1, Jan. 2,
2006 (a) 2005 (a) 2005 2006 (a) 2005
---------- --------- ------- --------- --------
Net income (loss) $(42,288) $(19,460) $3,348 $(55,168) $7,154
---------- --------- ------- --------- --------
Non-GAAP adjustments:
ICS Merger Related:
Cost of goods
sold:
Amortization of
acquisition
related
intangibles (1)
30,148 6,301 -- 36,449 --
Inventory FMV
write-up (1) 3,507 4,799 -- 8,306 --
Restructuring
charges (2) 4 278 -- 282 --
Acquisition
related
costs (3) 848 64 -- 912 --
Operating and
Other Expenses:
Acquired IPR&D
(1) (200) 2,500 -- 2,300 --
Amortization of
acquisition
related
intangibles (1) 20,702 3,885 -- 24,587 --
Restructuring
charges (2) 719 168 -- 887 --
Acquisition
related costs
(3) 664 (19) -- 645 --
Loss on short-
term
investments (4) -- 892 -- 2,597
IDT Restructuring
Related:
Cost of goods
sold:
Restructuring
charges (5) 30 119 322 667 347
Facility closure
costs (6) 481 3,580 33 6,313 272
Operating and
Other Expenses:
Restructuring
charges (5) 169 287 98 1,211 750
Facility closure
costs (6) (154) 4,722 -- 5,270 --
Other:
Cost of goods
sold:
Asset impairment
(7) (168) (92) (109) (824) (1,903)
Amortization of
acquisition-
related
intangibles (8) 4,403 1,842 1,626 7,652 3,953
Inventory FMV
write-up (12) 2,032 142 -- 2,174 --
Acquisition
related costs
(9) 62 -- -- 62 --
Patent
settlement -- -- -- -- (18)
Operating and
Other Expenses:
Amortization of
acquisition-
related
intangibles (8) 1,502 419 421 2,243 1,323
Acquired IPR&D
(8) -- -- 29 -- 1,765
Acquisition
related costs
(9) 449 462 507 1,409 1,593
Loss on equity
investments (10) -- -- -- 12,831
Taxes (11) 4,897 342 (21) (3,473) (31)
---------- --------- ------- --------- --------
Total Non-GAAP
adjustments 70,095 30,691 2,906 99,669 20,882
---------- --------- ------- --------- --------
Non-GAAP net income $27,807 $11,231 $6,254 $44,501 $28,036
========== ========= ======= ========= ========
(a) The results of operations include the results of operations of
ICS from September 16, 2005, the date of acquisition.
(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, 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, all of which
consist of severance and retention.
(6) Q3 2006 consists of costs associated with the exit of our leased
facilities in Santa Clara, severance and retention payments
associated with the closure of our Manila manufacturing plant and
gains realized on the sale of equipment related to our Manila
facility. Q3 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) Q3 2006 consists of retention costs incurred in connection with
our acquisition of Zettacom in Q1 2005, such as retention earned
by former employees, rent payments for the former Zettacom
facility, and transitional services provided. Q2 2006 and the
nine months ended January 1, 2006 include retention costs
associated with our acquisition of Freescale assets in Q2 2006
and Zettacom. The nine months ended January 2, 2005 include only
costs associated with our acquisition of Zettacom.
(10) Consists of an impairment charge taken in Q1 2005 related to our
investment in NetLogic.
(11) In addition to the tax effects of non-GAAP adjustments, Q3 2006
and Q2 2006 include tax associated with the repatriation of cash
under the Homeland Investment Act (HIA) and Q3 2006 includes a
book to 2005 tax return adjustment.
(12) Consists of the FMV adjustment of acquired inventory sold 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 Nine Months Ended
- ----------------------------------------------------------------------
Jan. 1, Oct. 2, Jan. 2, Jan. 1, Jan. 2,
2006 (a) 2005 (a) 2005 2006 (a) 2005
---------- --------- -------- --------- ---------
Revenues $160,792 $105,689 $95,658 $360,319 $293,636
Cost of Revenues 73,847 52,917 48,174 174,296 142,209
---------- --------- -------- --------- ---------
Gross profit 86,945 52,772 47,484 186,023 151,427
---------- --------- -------- --------- ---------
Operating expenses:
Research and
development 34,252 25,283 25,596 85,731 75,321
Selling, general
and
administrative 25,431 18,531 18,034 62,006 54,307
---------- --------- -------- --------- ---------
Total operating
expenses 59,683 43,814 43,630 147,737 129,628
---------- --------- -------- --------- ---------
Operating income 27,262 8,958 3,854 38,286 21,799
Interest expense (61) (63) (13) (135) (86)
Interest income and
other, net 2,666 4,059 3,657 10,627 8,986
---------- --------- -------- --------- ---------
Income before income
taxes 29,867 12,954 7,498 48,778 30,699
Provision for income
taxes 2,060 1,723 1,244 4,277 2,663
---------- --------- -------- --------- ---------
Net income $ 27,807 $ 11,231 $ 6,254 $ 44,501 $ 28,036
========== ========= ======== ========= =========
Net income per share:
Diluted $ 0.14 $ 0.09 $ 0.06 $ 0.31 $ 0.26
Weighted average
shares:
Diluted 200,441 125,057 107,444 144,495 108,544
(a) The results of operations include the results of operations of
ICS from September 16, 2005, the date of acquisition.
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)
Jan. 1, Oct. 2, Apr. 3,
(In thousands) 2006 2005 2005
- ----------------------------------------------------------------------
ASSETS
Current assets:
Cash and cash equivalents $204,752 $177,535 $188,761
Short-term investments 84,708 90,193 392,472
Accounts receivable, net 92,750 79,972 52,948
Inventories, net 59,667 60,920 37,331
Prepaid and other current assets 22,449 13,490 11,292
----------------------------------
Total current assets 464,326 422,110 682,804
Property, plant and equipment, net 120,383 136,007 124,570
Goodwill 1,006,348 998,369 55,523
Acquisition-related intangibles 482,926 545,720 29,812
Other assets 20,133 19,681 9,431
----------------------------------
TOTAL ASSETS $2,094,116 $2,121,887 $902,140
==================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $43,072 $38,187 $18,726
Accrued compensation and related
expenses 18,426 17,193 15,293
Deferred income on shipments to
distributors 30,469 20,274 19,478
Income taxes payable 29,549 23,446 25,722
Other accrued liabilities 28,857 34,602 20,206
----------------------------------
Total current liabilities 150,373 133,702 99,425
Deferred tax liabilities 18,540 18,265 4,709
Long term liabilities 15,339 17,163 10,890
----------------------------------
Total liabilities 184,252 169,130 115,024
Stockholders' equity 1,909,864 1,952,757 787,116
----------------------------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $2,094,116 $2,121,887 $902,140
==================================
CONTACT: IDT Investor Relations
Mike Knapp, 408-284-6515
mike.knapp@idt.com
or
IDT Worldwide Marketing
Phil Bourekas, 408-284-8200
phil.bourekas@idt.com
or
Porter Novelli
Brad Langley, 408-369-4600 ext. 636
brad.langley@porternovelli.com