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 October 2, 2011.
“During our fiscal second quarter, we continued to streamline operations and introduce innovative mixed-signal solutions for our three target markets -- communications infrastructure, cloud computing and consumer mobility,” said Dr. Ted Tewksbury, president and CEO of IDT. “Despite macroeconomic headwinds, we experienced strong sequential growth in Serial RapidIO® switches for wireless base stations and timing solutions for consumer devices, as well as robust design activity for new products.”
“In order to sharpen our focus on our target vertical markets, we sold our image processing assets and initiated the divestiture of the remainder of our video business. This enables us to reduce total operating expenses while reallocating R&D resources to product categories with greater growth potential and profitability. Our disciplined approach to product portfolio management and expense control has enabled us to achieve stronger operating margins on lower revenue levels, positioning us to grow earnings when customer demand improves.”
Recent Highlights
IDT recently announced:
- It has released the world's highest performance family of Gen 3 PCI Express® (PCIe) switches optimized for solid-state drive (SSD) storage arrays and cloud computing applications.
- The industry’s lowest power DDR3 register for Dual In-Line Memory Modules (DIMMs) in high-efficiency data centers.
- CoolRACTM technology -- a breakthrough power architecture for enterprise data centers that dramatically increases energy efficiency and lowers operating costs.
- It has expanded its portfolio of CrystalFreeTM CMOS oscillators with the world’s first ultra low power +/-50 parts-per-million (ppm) CMOS oscillator family, as well as the world's first family of oscillators that support the requirements of 5Gbps Super-Speed USB 3.0 controller applications.
- The industry's most flexible Universal Frequency Translators (UFTs) with industry-leading phase noise performance.
- The addition of a low-jitter Voltage Controlled Surface Acoustic Wave (SAW) Oscillator (VCSO) for high-end optical networking and telecom applications.
- It has released the industry's first integrated timing, thermal sensor and fan control solution for PC mobile platforms, digital video recorders (DVRs), set top boxes (STBs), Network Attached Storage (NAS) and enterprise Ethernet switches and routers
- Design wins for its PCIe switch, Low-Power DDR3 register, Serial RapidIO switch, PCI Express to RapidIO bridge, and low-power dual port solutions.
- It intends to sell its Hillsboro, Oregon wafer fabrication facility and related assets to Alpha and Omega Semiconductor Limited ("AOS", NASDAQ: AOSL).
The following highlights the Company’s financial performance on both a GAAP and non-GAAP basis. During the quarter, IDT divested its HQV business to Qualcomm for approximately $60 million. Concurrent with this divestiture, the Company also made the decision to divest the remaining portion of its video business. For financial statement purposes, the remaining video business will be classified as assets held for sale and will be treated as discontinued operations as the Company seeks a buyer of the business. 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 ongoing operations. IDT has removed results from the video business from current and historical non-GAAP results. 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 from continuing operations is attached to this press release.
- Revenue for the fiscal second quarter of 2012 was $138.3 million, compared with $159.6 million reported in the same period one year ago.
- GAAP net income from continuing operations for the fiscal second quarter of 2012 was $8.4 million or $0.06 per diluted share, versus GAAP net income of $25.2 million or $0.16 per diluted share in the same period one year ago. Fiscal second quarter 2012 GAAP results include $4.6 million in acquisition and restructuring related charges and $4.3 million in stock-based compensation.
- GAAP net income from discontinued operations for the September quarter was approximately $38.6 million or $0.26 per diluted share driven by a $46 million gain on the sale of HQV video processing business to Qualcomm which offset a $7.4 million loss generated by the video business unit.
- Non-GAAP net income from continuing operations for the fiscal second quarter of 2012 was $16.7 million or $0.11 per diluted share, compared with non-GAAP net income from continuing operations of $35.0 million or $0.22 per diluted share reported in the same period one year ago.
- GAAP gross profit for the fiscal second quarter of 2012 was $74.3 million, or 53.7 percent, compared with GAAP gross profit of $88.1 million, or 55.2 percent, in the same period one year ago. Non-GAAP gross profit for the fiscal second quarter of 2012 was $78.1 million, or 56.5 percent, compared with non-GAAP gross profit of $93.5 million, or 58.6 percent, reported in the same period one year ago.
- GAAP R&D expense for the fiscal second quarter of 2012 was $39.6 million, compared with GAAP R&D expense of $38.0 million reported in the same period one year ago. Non-GAAP R&D expense for the fiscal second quarter of 2012 was $38.1 million, compared with non-GAAP R&D of $35.2 million in the same period one year ago.
- GAAP SG&A expense for the fiscal second quarter of 2012 was $24.9 million, compared with GAAP SG&A expense of $25.6 million in the same period one year ago. Non-GAAP SG&A expense for the fiscal second quarter of 2012 was $22.6 million, compared with non-GAAP SG&A expense of $22.8 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 31, 2011. The webcast replay will be available after 5 p.m. Pacific time on October 31, 2011.
Investors can also listen to the live call at 1:30 p.m. Pacific time on October 31, 2011 by calling (877) 260-8900 or (612) 332-1210. The conference call replay will be available after 5 p.m. Pacific time on October 31, 2011 through 11:59 p.m. Pacific time on November 6, 2011 at (800) 475-6701 or (320) 365-3844. The access code is 219821.
About IDT
Integrated Device Technology, Inc., the Analog and Digital Company™, develops system-level solutions that optimize its customers’ applications. 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 Facebook, LinkedIn, Twitter, and YouTube.
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 April 3, 2011. 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, results from discontinued operations 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.
IDT, PureTouch, PowerSmart, 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 | |||||||||||||||||||||
October 2, | July 3, | September 26, | October 2, | September 26, | ||||||||||||||||||
2011 | 2011 | 2010 | 2011 | 2010 | ||||||||||||||||||
Revenues | $ | 138,318 | $ | 149,285 | $ | 159,570 | $ | 287,603 | $ | 313,191 | ||||||||||||
Cost of revenues | 64,015 | 67,569 | 71,449 | 131,584 | 144,705 | |||||||||||||||||
Gross profit | 74,303 | 81,716 | 88,121 | 156,019 | 168,486 | |||||||||||||||||
Operating expenses: | ||||||||||||||||||||||
Research and development | 39,567 | 39,667 | 38,012 | 79,234 | 75,992 | |||||||||||||||||
Selling, general and administrative | 24,868 | 25,848 | 25,604 | 50,716 | 51,675 | |||||||||||||||||
Total operating expenses | 64,435 | 65,515 | 63,616 | 129,950 | 127,667 | |||||||||||||||||
Operating income | 9,868 | 16,201 | 24,505 | 26,069 | 40,819 | |||||||||||||||||
Other income (expense), net | (1,828 | ) | 44 | 1,178 | (1,784 | ) | 1,441 | |||||||||||||||
Income from continuing operations before income taxes | 8,040 | 16,245 | 25,683 | 24,285 | 42,260 | |||||||||||||||||
Provision (benefit) for income taxes | (367 | ) | 947 | 441 | 580 | 1,386 | ||||||||||||||||
Net income from continuing operations | 8,407 | 15,298 | 25,242 | 23,705 | 40,874 | |||||||||||||||||
Discontinued operations: | ||||||||||||||||||||||
Gain from divestiture | 45,939 | - | - | 45,939 | - | |||||||||||||||||
Loss from discontinued operations | (7,352 | ) | (7,644 | ) | (5,039 | ) | (14,996 | ) | (10,280 | ) | ||||||||||||
Provision (benefit) for income taxes | (60 | ) | (29 | ) | (21 | ) | (89 | ) | (43 | ) | ||||||||||||
Net income (loss) from discontinued operations | 38,647 | (7,615 | ) | (5,018 | ) | 31,032 | (10,237 | ) | ||||||||||||||
Net income | $ | 47,054 | $ | 7,683 | $ | 20,224 | $ | 54,737 | $ | 30,637 | ||||||||||||
Basic net income per share continuing operations | $ | 0.06 | $ | 0.10 | $ | 0.16 | $ | 0.16 | $ | 0.26 | ||||||||||||
Basic net loss per share discontinued operations | 0.27 | (0.05 | ) | (0.03 | ) | 0.21 | (0.07 | ) | ||||||||||||||
Basic net income per share | $ | 0.33 | $ | 0.05 | $ | 0.13 | $ | 0.37 | $ | 0.19 | ||||||||||||
Diluted net income per share continuing operations | $ | 0.06 | $ | 0.10 | $ | 0.16 | $ | 0.16 | $ | 0.26 | ||||||||||||
Diluted net loss per share discontinued operations | 0.26 | (0.05 | ) | (0.03 | ) | 0.21 | (0.07 | ) | ||||||||||||||
Diluted net income per share | $ | 0.32 | $ | 0.05 | $ | 0.13 | $ | 0.37 | $ | 0.19 | ||||||||||||
Weighted average shares: | ||||||||||||||||||||||
Basic | 144,682 | 147,828 | 157,021 | 146,249 | 159,340 | |||||||||||||||||
Diluted | 146,169 | 151,074 | 157,649 | 148,686 | 160,171 | |||||||||||||||||
INTEGRATED DEVICE TECHNOLOGY, INC. | |||||||||||||||||||||
RECONCILIATION OF GAAP TO NON-GAAP | |||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||
(In thousands, except per share data) | |||||||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||||
October 2, | July 3, | September 26, | October 2, | September 26, | |||||||||||||||||
2011 | 2011 | 2010 | 2011 | 2010 | |||||||||||||||||
GAAP net income from continuing operations | $ | 8,407 | $ | 15,298 | $ | 25,242 | $ | 23,705 | $ | 40,874 | |||||||||||
GAAP diluted net income per share continuing operations | $ | 0.06 | $ | 0.10 | $ | 0.16 | $ | 0.16 | $ | 0.26 | |||||||||||
Acquisition related: | |||||||||||||||||||||
Amortization of acquisition related intangibles | 3,861 | 4,128 | 4,937 | 7,989 | 9,794 | ||||||||||||||||
Acquisition related costs (1) | - | - | 432 | - | 1,140 | ||||||||||||||||
Assets impairment (2) | (92 | ) | (90 | ) | (183 | ) | (182 | ) | (277 | ) | |||||||||||
Fair market value adjustment to acquired inventory sold | - | - | 117 | - | 379 | ||||||||||||||||
Restructuring related: | |||||||||||||||||||||
Severance and retention costs | (15 | ) | 383 | (125 | ) | 368 | 395 | ||||||||||||||
Facility closure costs (3) | (5 | ) | 28 | 285 | 23 | 1,262 | |||||||||||||||
Fabrication production transfer costs (4) | 816 | 1,845 | 1,383 | 2,661 | 2,212 | ||||||||||||||||
Other: | |||||||||||||||||||||
Compensation expense (benefit)—deferred compensation plan (5) | (1,337 | ) | 56 | 865 | (1,281 | ) | 739 | ||||||||||||||
Loss (gain) on deferred compensation plan securities (5) | 1,359 | (45 | ) | (600 | ) | 1,314 | (467 | ) | |||||||||||||
Stock-based compensation expense | 4,282 | 3,772 | 3,297 | 8,054 | 7,516 | ||||||||||||||||
Tax effects of Non-GAAP adjustments (6) | (541 | ) | (577 | ) | (699 | ) | (1,118 | ) | (668 | ) | |||||||||||
Non-GAAP net Income from continuing operations | $ | 16,735 | $ | 24,798 | $ | 34,951 | $ | 41,533 | $ | 62,899 | |||||||||||
GAAP weighted average shares - diluted | 146,169 | 151,074 | 157,649 | 148,686 | 160,171 | ||||||||||||||||
Non-GAAP adjustment | 1,994 | 1,747 | 2,087 | 1,840 | 1,920 | ||||||||||||||||
Non-GAAP weighted average shares - diluted (7) | 148,163 | 152,821 | 159,736 | 150,526 | 162,091 | ||||||||||||||||
Non-GAAP diluted net income per share continuing operations | $ | 0.11 | $ | 0.16 | $ | 0.22 | $ | 0.28 | $ | 0.39 | |||||||||||
GAAP gross profit | 74,303 | 81,716 | 88,121 | 156,019 | 168,486 | ||||||||||||||||
Acquisition and divestiture related: | |||||||||||||||||||||
Amortization of acquisition related intangibles | 2,917 | 3,184 | 3,536 | 6,101 | 7,009 | ||||||||||||||||
Acquisition related costs (1) | - | - | - | - | 5 | ||||||||||||||||
Assets impairment (2) | (92 | ) | (90 | ) | (183 | ) | (182 | ) | (277 | ) | |||||||||||
Fair market value adjustment to acquired inventory sold | - | 117 | - | 379 | |||||||||||||||||
Restructuring related: | |||||||||||||||||||||
Severance and retention costs | - | (175 | ) | - | (58 | ) | |||||||||||||||
Facility closure costs (3) | (4 | ) | 2 | 197 | (2 | ) | 896 | ||||||||||||||
Fabrication production transfer costs (4) | 816 | 1,845 | 1,383 | 2,661 | 2,212 | ||||||||||||||||
Other: | |||||||||||||||||||||
Compensation expense (benefit) - deferred compensation plan (5) | (289 | ) | 12 | 381 | (277 | ) | 354 | ||||||||||||||
Stock-based compensation expense | 453 | 427 | 133 | 880 | 642 | ||||||||||||||||
Non-GAAP gross profit | 78,104 | 87,096 | 93,510 | 165,200 | 179,648 | ||||||||||||||||
GAAP R&D expenses: | 39,567 | 39,667 | 38,012 | 79,234 | 75,992 | ||||||||||||||||
Acquisition and divestiture related: | |||||||||||||||||||||
Acquisition related costs (1) | - | (402 | ) | - | (796 | ) | |||||||||||||||
Restructuring related: | |||||||||||||||||||||
Severance and retention costs | 15 | (383 | ) | 98 | (368 | ) | (335 | ) | |||||||||||||
Facility closure costs (3) | 5 | (15 | ) | (8 | ) | (10 | ) | (116 | ) | ||||||||||||
Other: | |||||||||||||||||||||
Compensation expense (benefit) - deferred compensation plan (5) | 867 | (37 | ) | (400 | ) | 830 | (318 | ) | |||||||||||||
Stock-based compensation expense | (2,320 | ) | (1,999 | ) | (2,078 | ) | (4,319 | ) | (4,346 | ) | |||||||||||
Non-GAAP R&D expenses | 38,134 | 37,233 | 35,222 | 75,367 | 70,081 | ||||||||||||||||
GAAP SG&A expenses: | 24,868 | 25,848 | 25,604 | 50,716 | 51,675 | ||||||||||||||||
Acquisition and divestiture related: | |||||||||||||||||||||
Amortization of acquisition related intangibles | (944 | ) | (944 | ) | (1,401 | ) | (1,888 | ) | (2,785 | ) | |||||||||||
Acquisition related costs (1) | - | (30 | ) | - | (339 | ) | |||||||||||||||
Restructuring related: | |||||||||||||||||||||
Severance and retention costs | - | (148 | ) | - | (118 | ) | |||||||||||||||
Facility closure costs (3) | (4 | ) | (11 | ) | (80 | ) | (15 | ) | (250 | ) | |||||||||||
Other: | |||||||||||||||||||||
Compensation expense (benefit) - deferred compensation plan (5) | 181 | (7 | ) | (84 | ) | 174 | (67 | ) | |||||||||||||
Stock-based compensation expense | (1,509 | ) | (1,346 | ) | (1,086 | ) | (2,855 | ) | (2,528 | ) | |||||||||||
Non-GAAP SG&A expenses | 22,592 | 23,540 | 22,775 | 46,132 | 45,588 | ||||||||||||||||
GAAP interest income and other, net | (1,828 | ) | 44 | 1,178 | (1,784 | ) | 1,441 | ||||||||||||||
Loss (gain) on deferred compensation plan securities (5) | 1,359 | (45 | ) | (600 | ) | 1,314 | (467 | ) | |||||||||||||
Non-GAAP interest income and other, net | (469 | ) | (1 | ) | 578 | (470 | ) | 974 | |||||||||||||
GAAP provision (benefit) for income taxes continuing operations | (367 | ) | 947 | 441 | 580 | 1,386 | |||||||||||||||
Tax effects of Non-GAAP adjustments (6) | 541 | 577 | 699 | 1,118 | 668 | ||||||||||||||||
Non-GAAP provision (benefit) for income taxes continuing operations | 174 | 1,524 | 1,140 | 1,698 | 2,054 | ||||||||||||||||
(1) Consists of costs incurred in connection with merger and acquisition-related activities, including legal and accounting fees. | |||||||||||||||||||||
(2) Consists of an impairment charge related to a note receivable and subsequent recoveries. | |||||||||||||||||||||
(3) Consists of ongoing costs associated with the exit of our leased and owned facilities. | |||||||||||||||||||||
(4) Consists of costs incurred in connection with the transition of our wafer fabrication processes in Oregon facility to TSMC. | |||||||||||||||||||||
(5) Consists of gains and losses on marketable equity securities related to our deferred compensation arrangements and the changes in the fair value of the assets in a separate trust that is invested in Corporate owned life insurance under our deferred compensation plan. | |||||||||||||||||||||
(6) Consists of the tax effects of non-GAAP adjustments. | |||||||||||||||||||||
(7) For purposes of calculating non-GAAP diluted net income per share, the GAAP diluted weighted average shares outstanding is adjusted to exclude the benefits of stock compensation expense attributable to future services not yet recognized in the financial statements that are treated as proceeds assumed to be used to repurchase shares under the GAAP treasury method. | |||||||||||||||||||||
INTEGRATED DEVICE TECHNOLOGY, INC. | ||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
(Unaudited) | ||||||||
October 2, | April 3, | |||||||
(In thousands) | 2011 | 2011 | ||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 133,391 | $ | 104,680 | ||||
Short-term investments | 186,755 | 194,512 | ||||||
Accounts receivable, net | 76,440 | 81,798 | ||||||
Inventories | 79,808 | 67,041 | ||||||
Prepaid and other current assets | 22,012 | 23,929 | ||||||
Total current assets | 498,406 | 471,960 | ||||||
Property, plant and equipment, net | 72,054 | 67,754 | ||||||
Goodwill | 95,452 | 104,020 | ||||||
Acquisition-related intangibles | 41,080 | 51,021 | ||||||
Other assets | 36,003 | 32,705 | ||||||
TOTAL ASSETS | $ | 742,995 | $ | 727,460 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 30,293 | $ | 36,470 | ||||
Accrued compensation and related expenses | 26,531 | 28,212 | ||||||
Deferred income on shipments to distributors | 16,033 | 12,853 | ||||||
Deferred taxes liabilities | 2,220 | 2,224 | ||||||
Other accrued liabilities | 29,018 | 30,886 | ||||||
Total current liabilities | 104,095 | 110,645 | ||||||
Deferred tax liabilities | 1,516 | 1,513 | ||||||
Long term income taxes payable | 726 | 712 | ||||||
Other long term obligations | 15,223 | 15,808 | ||||||
Total liabilities | 121,560 | 128,678 | ||||||
Stockholders' equity | 621,435 | 598,782 | ||||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 742,995 | $ | 727,460 |
Contacts:
IDT Investor Relations
Mike Knapp,
408-284-6515
mike.knapp@idt.com
or
Press
Contact:
IDT Worldwide Marketing
Graham Robertson,
408-284-2644
graham.robertson@idt.com