EX-99.1 2 a5143275ex99_1.txt EXHIBIT 99.1 Exhibit 99.1 Reports Fiscal Fourth Quarter and Year End 2006 Results; Strength in Enterprise and Consumer Sales Outweighs Seasonal Weakness in Computing SAN JOSE, Calif.--(BUSINESS WIRE)--May 8, 2006--IDT(TM) (Integrated Device Technology, Inc.) (Nasdaq:IDTI), a leading provider of vital semiconductor solutions, today announced results for the fiscal fourth quarter and year ended April 2, 2006. The Company's revenues and EPS for the quarter were at the higher end of the Company's projections provided on the third quarter earnings call on January 26, 2006. The following highlights the Company's financial performance on both a GAAP and non-GAAP basis. Results for fiscal 2006 include the impact of the Integrated Circuit Systems, Inc. (ICS) merger, which was completed on September 16, 2005. The GAAP results include certain costs, charges, gains and losses 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 fourth quarter of 2006 were $167.5 million, an increase of 4 percent from the $160.8 million reported in the fiscal third quarter of 2006. -- Revenues for fiscal year 2006 were $ 527.8 million, an increase of 35 percent from the $390.6 million reported in fiscal year 2005. -- GAAP net loss for the fourth quarter was $26.5 million, or a loss of $0.13 per diluted share. This compares to a net loss of $42.3 million, or a loss of $0.21 per diluted share for the third quarter of fiscal 2006. Fourth quarter of fiscal 2006 GAAP results include $60.8 million of acquisition-related charges (including $55.9 million in intangibles amortization), a $3.2 million tax benefit related to the favorable treatment of repatriated earnings and $2.3 million in restructuring- related charges. Non-GAAP net income for the fourth quarter of fiscal 2006 was $30.7 million or $0.15 per diluted share, compared to net income of $27.8 million or $0.14 per diluted share in the third quarter of fiscal 2006. For further description and a complete reconciliation of GAAP to non-GAAP results, please refer to the attached tables. -- GAAP net loss for fiscal year 2006 was $81.7 million, or a loss of $0.52 per diluted share, compared with GAAP net income for fiscal year 2005 of $13.3 million, or $0.12 per diluted share. Non-GAAP net income for fiscal year 2006 was $75.2 million or $0.47 per diluted share, compared to net income of $35.5 million or $0.33 per diluted share in fiscal year 2005. Non-GAAP EPS increased 42 percent year over year. -- GAAP gross profit for the fourth quarter of fiscal 2006 was $53.5 million, compared to GAAP gross profit of $45.6 million in the prior quarter. Non-GAAP gross profit for the fourth quarter of fiscal 2006 was $92.2 million, compared to non-GAAP gross profit of $86.9 million in the prior quarter. -- GAAP operating expenses for the fiscal fourth quarter were $85.8 million, compared to GAAP operating expenses of $83.9 million in the prior quarter. Non-GAAP operating expenses for the fiscal fourth quarter were $61.3 million, compared to non-GAAP operating expenses of $59.7 million in the prior quarter "We are very pleased to close an exciting year with another strong quarter that reflects the health of our end markets and new product momentum," said Greg Lang, president and CEO of IDT. "We saw significant strength in our communications and consumer end markets that offset seasonal weakness in computing. We also benefited from new digital consumer and server product ramps. We look forward to fiscal 2007 as we continue to drive revenue growth and increase our profitability with best-in-class products targeting communications, computing and consumer end markets." Board of Directors Approves New $50 million Share Repurchase Program The IDT board of directors has approved a new $50 million share repurchase program, which the Company expects to commence in the current quarter. The Company's prior share repurchase program of $75 million was completed during the fiscal fourth quarter of 2006. Under the prior program, the Company repurchased approximately 5.7 million shares. Repurchases under the Company's new 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 repurchase program is effective immediately and may be discontinued at any time. As of April 2, 2006, IDT had approximately 198 million shares outstanding and approximately $296 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 http://www.IDT.com. The live webcast will begin at 1:30 p.m. PDT on May 8, 2006. The webcast replay will be available after 5 p.m. PDT on May 8 through May 15, 2006. Investors can also listen to the live call at 1:30 p.m. PDT May 8, 2006 by calling (888) 423-3271 or (612) 332-0530. The conference call replay will be available after 5 p.m. PDT on May 8 through 11:59 p.m. PDT on May 15, 2006 at (800) 475-6701 or (320) 365-3844. The access code is 823814. 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 January 1, 2006. 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 Year Ended ---------------------------------------------------------------------- April 2, Jan. 1, April 3, April 2, April 3, 2006 (a) 2006 (a) 2005 2006 (a) 2005 --------- --------- -------- --------- --------- Revenues $167,459 $160,792 $97,004 $527,778 $390,640 Cost of revenues 112,760 115,358 47,321 346,843 193,762 Restructuring and Asset Impairment 1,162 (164) 2,961 3,368 1,380 --------- --------- -------- --------- --------- Gross profit 53,537 45,598 46,722 177,567 195,498 --------- --------- -------- --------- --------- Operating expenses: Research and development 35,825 36,229 25,914 127,591 103,729 Selling, general and administrative 49,956 47,844 20,537 142,518 76,016 Acquired in-process research and development -- (200) 65 2,300 1,830 --------- --------- -------- --------- --------- Total operating expenses 85,781 83,873 46,516 272,409 181,575 --------- --------- -------- --------- --------- Operating income (loss) (32,244) (38,275) 206 (94,842) 13,923 Interest expense (87) (61) (16) (222) (102) Other-than-temporary impairment of investments -- -- -- (1,705) (12,831) Interest income and other, net 2,586 3,005 3,377 12,660 12,363 --------- --------- -------- --------- --------- Income (loss) before income taxes (29,745) (35,331) 3,567 (84,109) 13,353 Provision for income taxes (3,205) 6,957 (2,612) (2,401) 20 --------- --------- -------- --------- --------- Net income (loss) $(26,540) $(42,288) $ 6,179 $(81,708) $ 13,333 ========= ========= ======== ========= ========= Net income (loss) per share: Basic $ (0.13) $ (0.21) $ 0.06 $ (0.52) $ 0.13 Diluted $ (0.13) $ (0.21) $ 0.06 $ (0.52) $ 0.12 Weighted average shares: Basic 198,830 199,568 105,325 157,345 105,825 Diluted 198,830 199,568 107,190 157,345 108,204 (a) The results of operations include the results of operations of ICS from September 16, 2005, the date of acquisition. INTEGRATED DEVICE TECHNOLOGY, INC. RECONCILIATION OF GAAP TO NON-GAAP (Unaudited) (In thousands) Three Months Ended Year Ended ---------------------------------------------------------------------- April 2, Jan. 1, April 3, April 2, April 3, 2006 (a) 2006 (a) 2005 2006 (a) 2005 ----------- --------- --------- --------- --------- GAAP Net income (loss) $(26,540) $(42,288) $ 6,179 $(81,708) $ 13,333 =========== ========= ========= ========= ========= GAAP Diluted Earnings Per Share $ (0.13) $ (0.21) $ 0.06 $ (0.52) $ 0.12 =========== ========= ========= ========= ========= Acquisition Related: Acquired IPR&D (1) -- (200) 65 2,300 1,830 Amortization and impairment of acquisition related intangibles (1) 56,537 56,755 2,560 127,468 7,836 Inventory FMV write-up (1) 2,868 5,539 -- 13,348 -- Acquisition related costs (2) 1,375 2,023 463 4,403 2,056 Restructuring Related: Reduction in Force (3) 1,081 922 6,698 4,128 7,795 Facility closure costs (4) 1,251 327 20 12,834 292 Asset impairment (5) (11) (168) (610) (835) (2,513) Other: Sales Tax Refund (6) -- -- (5,617) -- (5,617) Patent Settlement -- -- -- -- (18) Loss on short-term investments (7) -- -- -- 2,597 -- Loss on equity investments (8) -- -- -- -- 12,831 Taxes affects of Non-GAAP adjustments (9) (5,881) 4,897 (2,341) (9,354) (2,372) ----------- --------- --------- --------- --------- Non-GAAP net income $ 30,680 $ 27,807 $ 7,417 $ 75,181 $ 35,453 =========== ========= ========= ========= ========= Non-GAAP Diluted Earnings Per Share $ 0.15 $ 0.14 $ 0.07 $ 0.47 $ 0.33 =========== ========= ========= ========= ========= Weighted average shares: Basic 198,830 199,568 105,325 157,345 105,825 Diluted 205,582 200,441 107,190 159,450 108,204 GAAP gross profit 53,537 45,598 46,722 177,567 195,498 ----------- --------- --------- --------- --------- Acquisition Related: Amortization and impairment of acquisition related intangibles (1) 33,616 34,551 2,131 77,717 6,084 Inventory FMV write-up (1) 2,868 5,539 -- 13,348 -- Acquisition related costs (2) 739 910 -- 1,713 -- Restructuring Related: Reduction in Force (3) 926 34 3,208 1,875 3,555 Facility closure costs (4) 510 481 20 6,823 292 Asset impairment (5) (11) (168) (610) (835) (2,513) Other: Sales Tax Refund -- -- (4,175) -- (4,175) Patent Settlement -- -- -- -- (18) ----------- --------- --------- --------- --------- Non-GAAP gross profit 92,185 86,945 47,296 278,208 198,723 ----------- --------- --------- --------- --------- GAAP Operating Expenses: 85,781 83,873 46,516 272,409 181,575 ----------- --------- --------- --------- --------- Acquisition Related: Acquired IPR&D (1) -- 200 (65) (2,300) (1,830) Amortization and impairment of acquisition related intangibles (1) (22,921) (22,204) (429) (49,751) (1,752) Acquisition related costs (2) (636) (1,113) (463) (2,690) (2,056) Restructuring Related: Reduction in Force (3) (155) (888) (3,490) (2,253) (4,240) Facility closure costs (4) (741) (185) -- (6,350) -- Other: Sales Tax Refund (6) -- -- 1,442 -- 1,442 ----------- --------- --------- --------- --------- Non-GAAP Operating Expenses 61,328 59,683 43,511 209,065 173,139 ----------- --------- --------- --------- --------- GAAP Interest income and other, net 2,499 2,944 3,361 10,733 (570) ----------- --------- --------- --------- --------- Facility Closure Costs (4) -- (339) -- (339) -- Loss on short-term investments (7) -- -- -- 2,597 -- Loss on equity investments (8) -- -- -- -- 12,831 ----------- --------- --------- --------- --------- Non-GAAP Interest income and other, net 2,499 2,605 3,361 12,991 12,261 ----------- --------- --------- --------- --------- GAAP Provision for Income Taxes (3,205) 6,957 (2,612) (2,401) 20 ----------- --------- --------- --------- --------- Taxes affects of Non-GAAP adjustments (9) 5,881 (4,897) 2,341 9,354 2,372 ----------- --------- --------- --------- --------- Non-GAAP Provision for Income Taxes 2,676 2,060 (271) 6,953 2,392 ----------- --------- --------- --------- --------- (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, our acquisition of assets from Freescale in Q2 2006, 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. These costs include amortization of acquired intangible assets, the FMV adjustment of acquired inventory sold, acquired in-process research and development, and impairment charges. (2) Fiscal 2006 periods consist of additional depreciation, above market rental costs resulting from purchase accounting and retention costs incurred in connection with the acquisition of ICS and the acquisition of Freescale assets in Q2 2006. Fiscal 2006 periods also include costs incurred in connection with our acquisition of Zettacom in Q1 2005, such as retention earned by former employees. The prior year periods include only costs associated with our acquisition of Zettacom. (3) Fiscal 2006 periods consist of severance and retention costs related to our merger with ICS in Q2 2006, primarily resulting from the elimination of duplicative functions, and costs related to previous reductions in force. The prior year periods consist of severance and retention costs related to previous reductions in force. (4) Fiscal 2006 periods consist of costs associated with the exit of our leased facilities in Santa Clara during Q1 2006, severance and retention costs related the closure of our manufacturing facility in the Philippines during Q1 2006, and severance costs related to the closure of our design center in Australia in Q3 2006. Fiscal 2005 consists of costs associated with the closure of our manufacturing facility in Salinas. (5) Consists of gains realized on the sale of assets related to our former manufacturing facility in Salinas, which were previously impaired. (6) Consists of a sales tax refund related to the Manufacturers Investment Credit. (7) Fiscal 2006 periods consist of other-than-temporary impairment charges recognized in Q2 2006 and Q1 2006 primarily as a result of our merger with ICS. (8) Consists of an impairment charge taken in Q1 2005 related to our investment in NetLogic. (9) Q3 and Q4 2006 include taxes associated with the repatriation of cash under the Homeland Investment Act (HIA), offset in Q4 2006 by reversals of certain foreign jurisdiction deferred tax liabilities. Q3 2006 includes a book to tax return adjustment for 2005. Fiscal 2006 also includes a net reversal of tax reserves resulting from an audit settlement in Q1 2006, certain tax effects related to the closure of our manufacturing facility in the Philippines in Q1 2006 as well the tax effects of certain non-GAAP adjustments. Fiscal 2005 periods include a net reversal of tax reserves, resulting from a settlement with the Internal Revenue Service in Q4 2005, tax effects related to the closure of our manufacturing facility in the Philippines, as well as the tax effects of certain non-GAAP adjustments. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) April 3, Jan. 1, Apr. 3, (In thousands) 2006 2006 2005 ---------------------------------------------------------------------- ASSETS Current assets: Cash and cash equivalents $266,173 $202,252 $188,761 Short-term investments 29,800 87,208 392,472 Accounts receivable, net 90,882 92,750 52,948 Inventories 58,692 59,667 37,331 Prepaid and other current assets 20,370 22,449 11,292 --------------------------------- Total current assets 465,917 464,326 682,804 Property, plant and equipment, net 108,663 120,383 124,570 Goodwill 1,010,314 1,006,348 55,523 Acquisition-related intangibles 427,772 482,926 29,812 Other assets 20,595 20,133 9,431 --------------------------------- TOTAL ASSETS $2,033,261 $2,094,116 $902,140 ================================= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $39,891 $43,072 $18,726 Accrued compensation and related expenses 23,198 18,426 15,293 Deferred income on shipments to distributors 29,797 30,469 19,478 Income taxes payable 29,125 29,549 25,722 Other accrued liabilities 25,633 28,857 20,206 --------------------------------- Total current liabilities 147,644 150,373 99,425 Deferred tax liabilities 12,080 18,540 4,709 Long term liabilities 15,581 15,339 10,890 --------------------------------- Total liabilities 175,305 184,252 115,024 Stockholders' equity 1,857,956 1,909,864 787,116 --------------------------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $2,033,261 $2,094,116 $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