EX-99.1 2 dex991.htm PRESS RELEASE Press Release

Exhibit 99.1

LOGO

   Integrated Circuit Systems, Inc.

 

Corporate Headquarters
2435 Boulevard of the Generals
Norristown, PA 19403
Phone: 610-630-5300
Fax: 610-630-5399
Web Site: http://www.icst.com
Company Contact:
Justine Lien, CFO
Integrated Circuit Systems, Inc.
610-630-5300

 

INTEGRATED CIRCUIT SYSTEMS, INC. ANNOUNCES

FISCAL 2005 FOURTH QUARTER AND FULL YEAR RESULTS

 

Norristown, PA – August 11, 2005 - Integrated Circuit Systems, Inc. (NASDAQ: ICST) today announced financial results for the fourth quarter and fiscal year ended July 2, 2005.

 

($ millions, except EPS)

 

   

Q4FY

2005

   

Q4FY

2004

   

Y-Y

Growth

    

Q3FY

2005

   

Q-Q

Growth

  

Revenue

    $ 58.3    $ 69.5    -16.1 %   $ 58.1    0.3 %

Gross Margin

    $ 34.4    $ 42.0    -18.1 %   $ 34.3    0.3 %

Operating Income

    $ 11.3    $ 21.7    -47.9 %   $ 13.7    -17.5 %

Net Income

    $ 10.3    $ 24.0    -57.1 %   $ 13.0    -20.8 %

Fully Diluted EPS

    $ 0.15    $ 0.33    -54.5 %   $ 0.18    -16.7 %

Pro Forma Operating Income (1)

    $ 14.5    $ 21.7    -33.2 %   $ 13.7    5.8 %

Pro Forma Net Income (1)

    $ 13.5    $ 24.0    -43.8 %   $ 13.0    3.8 %

Pro Forma Fully Diluted EPS (1)

    $ 0.19    $ 0.33    -42.4 %   $ 0.18    5.6 %
(1) Pro Forma operating income, net income and fully diluted EPS are derived by removing acquisition costs relating to the merger with IDT.

Revenues

   

Q4FY2005

% of

Revenue

    

Q4FY2004

% of
Revenue

    

Y-Y

Growth

    

Q3FY2005

% of
Revenue

    

Q-Q

Growth

  

PC

    46 %   39 %   0 %   46 %   0 %

Digital Consumer

    18 %   15 %   -5 %   17 %   6 %

Communications

    31 %   38 %   -31 %   32 %   -2 %

Military

    5 %   8 %   -49 %   5 %   1 %

 

Revenues for the quarter were slightly up from the previous quarter driven by an increase in digital consumer sales, offset by declines in communications. Clocks into set-top boxes increased seasonally, and clocks into digital TVs ramped. Communications declined driven by a slowness of shipments of clocks into DDR II. While the quarter was slow for DDR II, we saw an increase in bookings for these products toward the end of the quarter.

 

Product mix for Q4FY2005 was approximately the same as Q3FY2005, keeping gross margin at 59%.

 

Operating expenses for the quarter were down compared to last quarter without the $3.2 million of expense associated with the proposed merger with IDT, which contributed to a pro forma operating income of $14.5 million, compared to $13.7 million in the previous quarter. Pro forma operating income was 25% of revenue for the quarter.

 

Net income for the quarter was $10.3 million or $0.15 per share. Pro forma net income was $13.5 million or $0.19 per share.

 

The accounts receivable balance declined 12% from the end of the third fiscal quarter, and inventory also decreased as inventory turns went from 4.4 times last quarter to 4.8 times this quarter. These both contributed to the increase in cash and investments of $26 million from last quarter. The ending balance for cash and investments at July 2, 2005 was $233 million.

 

Hock Tan, President and CEO commented, “Despite flatness in communications and PC end demand, we continue to see strength in our business as the book-to-bill exceeded 1:1 in this quarter of weak seasonality. We ended the quarter with the strongest backlog of fiscal 2005 and, as fully expected, are benefiting from accelerating orders in PC and Digital Consumer as we enter fiscal 2006.”

($ millions, except EPS)

 

    FY2005
    FY2004
    Y-Y Growth
  

Revenue

    $ 243.1    $ 272.1    -11 %

Gross Margin

    $ 143.4    $ 163.4    -12 %

Operating Income

    $ 51.4    $ 84.8    -39 %

Net Income

    $ 47.4    $ 78.5    -40 %

Fully Diluted EPS

    $ 0.67    $ 1.08    -38 %

Pro Forma Operating Income (1)

    $ 61.6    $ 84.8    -27 %

Pro Forma Net Income (1)

    $ 57.7    $ 78.5    -26 %

Pro Forma Fully Diluted EPS (1)

    $ 0.81    $ 1.08    -25 %
(1) Pro Forma operating income, net income, and fully diluted EPS are derived by removing research and development expense related to the asset acquisition which occurred in the first quarter of fiscal 2005 and by removing costs relating to the merger with IDT.

 

The company reported revenues of $243.1 million, an 11% decrease from fiscal year 2004. The downfall in revenue from last year is mostly attributed to the slowness in the communications markets in the first half of fiscal 2005. Gross margin for fiscal 2005 was 59%, compared to 60% in fiscal 2004, as the product mix shifted to the lower margin markets. Operating expenses increased during the year as non-cash charges increased by $2 million due to the purchase of the Video business unit in the first fiscal quarter; R&D decreased as variable compensation declined; and SG&A increased due to costs associated with Sarbanes-Oxley, legal fees and increased sales commission rates. Net Income for the year was $47.4 million and earnings per share of $0.67. Pro forma net income for the year was $57.7 million and earnings per share of $0.81.

 

Fourth Quarter Fiscal 2005 Conference Call

 

ICS will host a conference call to discuss the earnings results for the fourth quarter of fiscal year 2005 at 9:00AM eastern time August 11, 2005. The company will also discuss its strategic direction and market conditions. Interested parties are invited to listen to the conference call by dialing toll free 1-877-405-3430, or 1-706-634-6397 for international callers; conference ID# 7368389. The call will also be broadcast via the internet and can be accessed from ICS’ corporate website at www.icst.com.

 

About ICS

 

Integrated Circuit Systems, Inc. is a leader in the design, development and marketing of silicon timing devices for communications, networking, computing and digital multimedia applications. The Company is headquartered in Norristown, PA, with key facilities in San Jose, CA; Tempe, AZ; Worcester, MA and Singapore.

 

In our upcoming Annual Report for the fiscal year ended July 2, 2005, we will report on the effectiveness of our system of internal controls over financial reporting for such fiscal year, as required by Section 404 of the

Sarbanes-Oxley Act of 2002 and the rules and regulations adopted pursuant thereto. We are endeavoring to complete our assessment and remediation procedures in a timely manner and expect to achieve this goal. We also would like to note that the results stated above are subject to change as the Company’s independent registered public accounting firm completes its procedures with regard to the preparation of the Company’s Annual Report on Form 10-K for the year ended July 2, 2005.

 

Statements included in this release, to the extent they are forward looking, involve a number of risks and uncertainties related to competitive factors, technological developments and market demand. Further information on these and other potential factors that could affect the Company’s financial results can be found in the Company’s Form 10-K filed on September 16, 2004.

INTEGRATED CIRCUIT SYSTEMS, INC.

CONSOLIDATED OPERATING RESULTS

 

    

Unaudited

Three Months Ended

    

Unaudited

Twelve Months Ended

    

July 2,

2005

   

April 2,

2005

   

July 3,

2004

    

July 2,

2005

   

July 3,

2004

(In thousands)

 

                          

Revenues

    $ 58,262    $ 58,124    $ 69,496     $ 243,110    $ 272,140

Cost of sales

      23,845      23,817      27,476       99,703      108,764
    
  
  
 
  

Gross Margin

      34,417      34,307      42,020       143,407      163,376
    
  
  
 
  

Expenses:

                                    

Research and development

      9,421      9,943      10,604       38,977      40,352

Research and development Video acquisition

      —        —        —         7,051      —  

Selling, general and administrative

      9,407      9,495      9,138       38,372      35,218

Deferred compensation

      1      60      —         162      731

Amortization of intangibles

      1,114      1,115      575       4,277      2,300

Acquisition Costs

      3,203      —        —         3,203      —  
    
  
  
 
  
       23,146      20,613      20,317       92,042      78,601
    
  
  
 
  

Operating income

      11,271      13,694      21,703       51,365      84,775
    
  
  
 
  

Other income (expense)

      1,400      1,234      606       4,173      2,241
    
  
  
 
  

Income before income taxes

      12,671      14,928      22,309       55,538      87,016
    
  
  
 
  

Income taxes

      2,404      1,921      (1,727 )     8,135      8,501
    
  
  
 
  

Net income

      10,267      13,007      24,036       47,403      78,515
    
  
  
 
  

Basic EPS:

                                    

Net income

    $ 0.15    $ 0.19    $ 0.34     $ 0.68    $ 1.12

Diluted EPS:

                                    

Net income

    $ 0.15    $ 0.18    $ 0.33     $ 0.67    $ 1.08

Weighted Shares:

                                    

Basic

      70,062      70,041      70,246       70,197      70,358

Diluted

      70,751      70,718      71,913       71,109      72,578

Capital expenditures

    $ 1,005    $ 923    $ 2,758     $ 7,221    $ 8,587

Depreciation and amortization

    $ 2,795    $ 2,722    $ 2,144     $ 11,064    $ 8,436

 

Prepared in accordance with GAAP

INTEGRATED CIRCUIT SYSTEMS, INC.

PRO FORMA CONSOLIDATED OPERATING RESULTS

 

    

Unaudited

Three Months Ended

    

Unaudited

Twelve Months Ended

    

July 2,

2005

   

April 2,

2005

   

July 3,

2004

    

July 2,

2005

   

July 3,

2004

(In thousands)

 

                          

Revenues

    $ 58,262    $ 58,124    $ 69,496     $ 243,110    $ 272,140

Cost of sales

      23,845      23,817      27,476       99,703      108,764
    
  
  
 
  

Gross margin

      34,417      34,307      42,020       143,407      163,376
    
  
  
 
  

Expenses:

                                    

Research and development

      9,421      9,943      10,604       38,977      40,352

Selling, general and administrative

      9,407      9,495      9,138       38,372      35,218

Deferred compensation

      1      60      —         162      731

Amortization of intangibles

      1,114      1,115      575       4,277      2,300
    
  
  
 
  
       19,943      20,613      20,317       81,788      78,601
    
  
  
 
  

Operating income

      14,474      13,694      21,703       61,619      84,775
    
  
  
 
  

Other income (expense)

      1,400      1,234      606       4,173      2,241
    
  
  
 
  

Income before income taxes

      15,874      14,928      22,309       65,792      87,016
    
  
  
 
  

Income taxes

      2,404      1,921      (1,727 )     8,135      8,501
    
  
  
 
  

Pro forma net income

      13,470      13,007      24,036       57,657      78,515
    
  
  
 
  

Basic EPS:

                                    

Pro forma Net income

    $ 0.19    $ 0.19    $ 0.34     $ 0.82    $ 1.12

Diluted EPS:

                                    

Pro forma Net income

    $ 0.19    $ 0.18    $ 0.33     $ 0.81    $ 1.08

Weighted Shares:

                                    

Basic

      70,062      70,041      70,246       70,197      70,358

Diluted

      70,751      70,718      71,913       71,109      72,578

INTEGRATED CIRCUIT SYSTEMS, INC.

PRO FORMA CONSOLIDATED OPERATING RESULTS

(continued)

 

    

Unaudited

Three Months Ended

   

Unaudited

Twelve Months Ended

(In thousands)

 

   

July 2,

2005

   

April 2,

2005

    July 3,
2004
   

July 2,

2005

   

July 3,

2004

Reconciliation of our GAAP Net Income to our Pro Forma Net Income:

                                   

GAAP Net Income

    $ 10,267    $ 13,007    $ 24,036    $ 47,403    $ 78,515

Adjustments to Net Income:

                                   

Research and development Video acquisition

      —        —        —        7,051      —  

Acquisition Costs

      3,203                    3,203       

Pro Forma Net Income

    $ 13,470    $ 13,007    $ 24,036    $ 57,657    $ 78,515

Reconciliation of our GAAP Operating Income to our Pro Forma Operating Income:

                                   

GAAP Operating Income

    $ 11,271    $ 13,694    $ 21,703    $ 51,365    $ 84,775

Adjustments to Operating Income:

                                   

Research and development Video acquisition

      —        —        —        7,051      —  

Acquisition Costs

      3,203                    3,203       

Pro Forma Operating Income

    $ 14,474    $ 13,694    $ 21,703    $ 61,619    $ 84,775

Reconciliation of our GAAP Basic Net Income per share to our Pro Forma Net Income Per Share:

                                   

GAAP Basic Net Income per share

    $ 0.15    $ 0.19    $ 0.34    $ 0.68    $ 1.12

Adjustments to Basic Net Income per share:

                                   

Research and development Video acquisition

      —        —        —        0.10      —  

Acquisition Costs

      0.04                    0.04       

Pro Forma Basic Net Income Per Share

    $ 0.19    $ 0.19    $ 0.34    $ 0.82    $ 1.12

Reconciliation of our GAAP Diluted Net Income Per Share to our Pro Forma Diluted Net Income Per Share:

                                   

GAAP Diluted Net Income per share

    $ 0.15    $ 0.18    $ 0.33    $ 0.67    $ 1.08

Adjustments to Diluted Net Income per share:

                                   

Research and development Video acquisition

      —        —               0.10      —  

Acquisition Costs

      0.04                    0.04       

Pro Forma Diluted Net Income Per Share

    $ 0.19    $ 0.18    $ 0.33    $ 0.81    $ 1.08

 

To supplement the consolidated financial results prepared under generally accepted accounting principles (“GAAP”), ICS uses a non-GAAP conforming, or pro forma, measure of net income that is GAAP net income adjusted to exclude certain costs, expenses and gains. Pro forma net income gives an indication of ICS’s baseline performance before gains, losses or other charges that are considered by management to be outside of the company’s core operating results. In addition, pro forma net income (loss) is among the primary indicators management uses as a basis for planning and forecasting future periods. ICS computes pro forma net income (loss) by adjusting GAAP net income (loss) with the impact of non-recurring acquisition-related charges. ICS provides pro forma results as additional information for its operating results. These measures are not in accordance with, or an alternative for, generally accepted accounting principles and may be different from pro forma measures used by other companies.

INTEGRATED CIRCUIT SYSTEMS, INC.

CONDENSED CONSOLIDATED BALANCE SHEET

 

    

July 2,

2005

    

April 2,

2005

    

July 3,

2004

  
(in thousands, excluding Other Financial Data)    (unaudited)     (unaudited)        

ASSETS

                         

Current Assets:

                         

Cash and marketable securities

    $ 126,980     $ 68,072     $ 195,579  

Accounts receivable, net

      40,110       45,489       45,717  

Inventory, net

      17,430       18,431       18,772  

Deferred tax assets

      5,678       18,658       22,759  

Other current assets

      6,849       7,160       7,189  
    
 
 

Total current assets

      197,047       157,810       290,016  
    
 
 

Property & equipment, net

      19,416       20,417       19,254  

Long term investments

      105,865       139,001       5,000  

Intangibles

      40,943       42,077       27,842  

Goodwill

      35,422       35,422       35,422  

Other assets, net

      4,502       5,143       62  

Deferred tax assets

      4,527       —         —    
    
 
 

Total assets

    $ 407,722     $ 399,870     $ 377,596  
    
 
 

LIABILITIES AND SHAREHOLDERS’ EQUITY

                         

Current Liabilities:

                         

Lease payable

    $ 8     $ 38     $ 82  

Accounts payable

      14,103       13,879       17,557  

Accrued expenses and other current liabilities

      6,070       6,285       8,518  

Income taxes payable

      2,197       930       3,576  
    
 
 

Total current liabilities

      22,378       21,132       29,733  
    
 
 

Other long term liabilities

      3,751       12,448       11,638  
    
 
 

Total liabilities

      26,129       33,580       41,371  
    
 
 

Shareholders’ Equity:

                         

Common stock

      734       731       727  

Additional paid in capital

      294,683       289,908       282,569  

Retained earnings

      154,543       144,276       107,140  

Deferred compensation

      (543 )     (801 )     —    

Treasury stock

      (67,824 )     (67,824 )     (54,211 )
    
 
 

Total shareholders’ equity

      381,593       366,290       336,225  
    
 
 

Total liabilities and shareholder’s equity

    $ 407,722     $ 399,870     $ 377,596  
    
 
 

OTHER FINANCIAL DATA:

                         

Days sales outstanding

      62       62       58  

Inventory turns

      4.8       4.4       5.2