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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., November 8, 2005 — IDT™ (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 750employees 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 consolidatethe 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® 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 solutionsportfolio 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. 

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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.

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View Presentation (PDF)