EX-99.1 2 a5015750-ex991.txt EXHIBIT 99.1 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