EX-99.1 2 a4940215ex991.txt EXHIBIT 99.1 Exhibit 99.1 IDT Reports Fiscal Q1 2006 Results; Fiscal Q1 2006 Non-GAAP EPS of $0.05, GAAP EPS of $0.06 on Revenues of $93.8 Million SAN JOSE, Calif.--(BUSINESS WIRE)--July 27, 2005--IDT(TM) (Integrated Device Technology, Inc.) (Nasdaq:IDTI), a leading communications IC company, today announced its results for the first quarter of its 2006 fiscal year, ended July 3, 2005. The results announced were in line with the revised forecast provided on July 6, 2005. The following outlines the Company's financial performance on both a GAAP and non-GAAP basis: -- Revenues for the first fiscal quarter were $93.8 million, a decrease of 3 percent compared to the fourth quarter of fiscal 2005 and a decrease of just over 7 percent from the first quarter of fiscal 2005. -- Non-GAAP net income for the first quarter of fiscal 2006 was $5.5 million, or $0.05 per diluted share, compared to net income of $7.4 million, or $0.07 per diluted share, in the fourth quarter of fiscal 2005 and net income of $12.3 million, or $0.11 per diluted share, for the same quarter one year ago. -- GAAP net income for the first quarter of fiscal 2006 was $6.6 million, or $0.06 per diluted share, compared to net income of $6.2 million, or $0.06 per diluted share, for the fourth quarter of fiscal 2005. GAAP net loss for the first quarter of fiscal 2005 was $(5.0) million, or $(0.05) per diluted share. -- GAAP net income includes certain costs, charges and gains in accordance with GAAP, which management excludes from non-GAAP results, as it believes they are not directly related to on-going operations. -- During the quarter ended July 3, 2005, the Company excluded $4.2 million in costs associated with restructuring actions taken during the past two quarters, $1.7 million associated with an other-than-temporary impairment on its investment portfolio, and $2.2 million associated with amortization of intangibles, assets and other acquisition-related costs. -- The Company also excluded $8.9 million of net tax benefit primarily related to a reduction in income tax reserves in connection with a partial settlement with the IRS and a $0.6 million gain related to sales of assets from its closed Salinas facility, which were previously impaired. See the following tables for a complete reconciliation of GAAP to non-GAAP results. "While revenues came in below our original forecast, we are pleased to have met our original earnings projection," said Greg Lang, president and CEO of IDT. "Our revenues experienced seasonal weakness across our distribution customers and commodity SRAM products. Our company wide restructuring activities, which are slightly ahead of schedule, made achieving our earnings projection possible. We view these profitability measures as an important step in continuing to strengthen our financial results. We expect the restructuring to be substantially complete in the next two quarters, resulting in an annualized savings of approximately $25 million." Status of Profitability Measures During the past six months, the Company 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 consolidate six California facilities into a single San Jose campus. In April, the Company also announced the pending closure of its assembly and test facility in Manila, the Philippines, which will result in a reduction in force of approximately 750 employees when completed. During this recent quarter, the Company remained on-track with these overall efforts. The Company has begun the consolidation of its California facilities, which is expected to be complete by August 2005. As of June 2005, the test and finish work previously performed at the Manila facility was transferred to the Company's assembly and test facility in Penang, Malaysia, resulting in a reduction of more than 500 Manila employees, and the transition of assembly to sub-contract partners is substantially complete. "We remain committed to continuing to strengthen our financial performance in fiscal 2006," added Lang. "We believe the combination of our restructuring efforts, our ongoing investments in new technology, and our announced agreement with ICS to merge, will position us well for top and bottom line growth." 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. PDT on July 27, 2005. The Webcast replay will be available after 5 p.m. PDT on July 27 through August 17, 2005. A taped telephone replay of the conference call will be available on July 27, 2005 beginning at 5 p.m. PDT by calling (800) 475-6701 or (320) 365-3844 and will be accessible until 11:59 p.m. PDT on August 3, 2005. The access code is 789585. Investors can also listen to the live call at 1:30 p.m. PDT on July 27, 2005 by calling (800) 553-5260 or (612) 332-1025. 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), 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 San Jose, Calif., the Company employs approximately 2,500 people worldwide and has a wafer manufacturing facility in Oregon and an assembly and test facility in 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. 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. Additional Information and Where to Find It IDT has filed a registration statement on Form S-4, and IDT and ICS have filed a related joint proxy statement/prospectus, in connection with the merger transaction involving IDT and ICS. Investors and security holders are urged to read the registration statement on Form S-4 and the related joint proxy/prospectus because they contain important information about the merger transaction. Investors and security holders may obtain free copies of these documents and other documents filed with the SEC at the SEC's Web site at www.sec.gov. In addition, investors and security holders may obtain free copies of the documents filed with the SEC by IDT by contacting IDT Investor Relations at 408-284-6515. Investors and security holders may obtain free copies of the documents filed with the SEC by ICS by contacting ICS Investor Relations at 610-630-5300. IDT, ICS and their directors and executive officers may be deemed to be participants in the solicitation of proxies from the stockholders of IDT and ICS in connection with the merger transaction. Information regarding the special interests of these directors and executive officers in the merger transaction are included in the joint proxy statement/prospectus of IDT and ICS described above. Additional information regarding the directors and executive officers of IDT is also included in the IDT proxy statement for its 2004 Annual Meeting of Stockholders, which was filed with the SEC on July 23, 2004. Additional information regarding the directors and executive officers of ICS is also included in ICS's proxy statement for its 2004 Annual Meeting of Stockholders, which was filed with the SEC on September 28, 2004. These documents are available free of charge at the SEC's Web site at www.sec.gov and from Investor Relations at IDT and ICS as described above. 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 ---------------------------------------------------------------------- July 3, Apr. 3 June 27, 2005 2005 2004 -------- -------- --------- Revenues $93,838 $97,004 $101,307 Cost of revenues 51,596 47,321 48,361 Restructuring charges, asset impairment and other (451) 2,961 (209) -------- -------- --------- Gross profit 42,693 46,722 53,155 -------- -------- --------- Operating expenses: Research and development 27,456 25,914 26,001 Selling, general and administrative 19,061 20,537 19,387 Acquired in-process research and development - 65 1,736 -------- -------- --------- Total operating expenses 46,517 46,516 47,124 -------- -------- --------- Operating income (loss) (3,824) 206 6,031 Interest expense (11) (16) (47) Loss on equity investments - - (12,831) Other-than-temporary impairment of investments (1,705) - - Interest income and other, net 3,902 3,377 2,505 -------- -------- --------- Income (loss) before income taxes (1,638) 3,567 (4,342) Provision (benefit) for income taxes (8,218) (2,612) 705 -------- -------- --------- Net income (loss) $6,580 $6,179 $(5,047) ======== ======== ========= Net income (loss) per share: Basic $0.06 $0.06 $(0.05) Diluted $0.06 $0.06 $(0.05) Weighted average shares: Basic 106,474 105,325 106,026 Diluted 108,058 107,190 106,026 INTEGRATED DEVICE TECHNOLOGY, INC. NON-GAAP ADJUSTMENTS (Unaudited) (In thousands) Three Months Ended ---------------------------------------------------------------------- July 3, Apr. 3, June 27, 2005 2005 2004 ---------------- -------- Net income (loss) $6,580 $6,179 $(5,047) ---------------- -------- Non-GAAP adjustments: Cost of goods sold: Acquisition Related: Amortization and impairment of acquisition-related intangibles (1) 1,407 2,131 1,014 Restructuring Related: Restructuring charges (2) 518 3,208 25 Facility closure costs (4) 2,252 20 195 Other: Asset impairment (3) (564) (610) (209) Sales tax refund (5) - (4,175) - Patent settlement - - (18) Operating expenses: Acquisition Related: Acquired IPR&D (1) - 65 1,736 Amortization of acquisition- related intangibles (1) 322 429 538 Acquisition related costs (6) 498 463 592 Restructuring Related: Restructuring charges (2) 755 3,490 652 Facility closure costs (4) 702 - - Other: Sales tax refund (5) - (1,442) - Loss on equity investments (7) - - 12,831 Other-than-temporary impairment on short-term investments (8) 1,705 - - Taxes (9) (8,712) (2,341) (28) ---------------- -------- Total Non-GAAP adjustments (1,117) 1,238 17,328 ---------------- -------- Non-GAAP net income $5,463 $7,417 $12,281 ================ ======== (1) 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. (2) Q4 2005 and Q1 2006 consist of costs for restructuring actions taken during the past two quarters, primarily composed of severance and retention payments. Q1 2005 consists of restructuring actions taken in the period, composed primarily of severance. (3) Consists of gains realized on the sale of assets related to our closed Salinas facility which were previously impaired. (4) Q1 2006 consists of costs associated with the closure of our Manila plant, primarily composed of severance and retention payments, and costs associated with the exit of buildings at our Santa Clara facility. Q1 05 consists of costs associated with the closure of our Salinas plant. (5) Consists of a sales tax refund received in Q4 2005 related to the Manufacturers Investment Credit. (6) 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. (7) Consists of an impairment charge in Q1 2005 related to our investment in NetLogic. (8) Consists of an other-than-temporary impairment charge related to certain short-term investments. (9) Q1 2006 and Q4 2005 consists of a net reduction in income tax reserves as a result of partial settlements with the IRS. In addition, Q4 2005 includes tax effects of the Manila plant closure announcement. INTEGRATED DEVICE TECHNOLOGY, INC. NON-GAAP STATEMENTS OF OPERATIONS (Unaudited) (In thousands, except per share data) Three Months Ended ---------------------------------------------------------------------- July 3, Apr. 3, June 27, 2005 2005 2004 -------- -------- --------- Revenues $93,838 $97,004 $101,307 Cost of revenues 47,532 49,708 47,145 -------- -------- --------- Gross profit 46,306 47,296 54,162 -------- -------- --------- Operating expenses: Research and development 26,196 25,281 24,950 Selling, general and administrative 18,044 18,230 18,656 -------- -------- --------- Total operating expenses 44,240 43,511 43,606 -------- -------- --------- Operating income 2,066 3,785 10,556 Interest expense (11) (16) (47) Interest income and other, net 3,902 3,376 2,505 -------- -------- --------- Income before income taxes 5,957 7,145 13,014 Provision (benefit) for income taxes 494 (272) 733 -------- -------- --------- Net income $5,463 $7,417 $12,281 ======== ======== ========= Net income per share: Diluted $0.05 $0.07 $0.11 Weighted average shares: Diluted 108,058 107,190 110,344 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) July 3, Apr. 3 (In thousands) 2005 2005 ---------------------------------------------------------------------- ASSETS Current assets: Cash and cash equivalents $266,563 $188,761 Short-term investments 333,758 392,472 Accounts receivable, net 49,915 52,948 Inventories 37,318 37,331 Prepaids and other current assets 11,696 11,292 ------------------- Total current assets 699,250 682,804 Property, plant and equipment, net 120,949 124,570 Goodwill 55,523 55,523 Acquisition-related intangibles 28,083 29,812 Other assets 9,503 9,431 ------------------- TOTAL ASSETS $913,308 $902,140 =================== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $25,900 $18,726 Accrued compensation and related expenses 14,041 15,293 Deferred income on shipments to distributors 17,283 19,478 Income taxes payable 16,644 25,722 Other accrued liabilities 18,959 20,206 ------------------- Total current liabilities 92,827 99,425 Long term liabilities 15,478 15,599 ------------------- Total liabilities 108,305 115,024 Stockholders' equity 805,003 787,116 ------------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $913,308 $902,140 =================== CONTACT: IDT Dawn Morse, 408-284-6515 (Investor Relations) dawn.morse@idt.com Phil Bourekas, 408-284-8200 (Worldwide Marketing) phil.bourekas@idt.com or Porter Novelli Brad Langley, 408-369-4600 ext. 636 brad.langley@porternovelli.com