IDT Reports Q2 Fiscal Year 2015 Financial Results

  • Stock based compensation expense.
  • Compensation expense (benefit) – deferred compensation, consists of gains and losses on marketable equity securities related to our deferred compensation arrangements.
  • Loss (gain) on deferred compensation plan securities represents the changes in the fair value of the assets in a separate trust that is invested in corporate owned life insurance under our deferred compensation plan.
  • Life insurance proceeds received, represents proceeds received under corporate owned life insurance under our deferred compensation plan.
  • Tax effects of non-GAAP adjustments. Effective first quarter of fiscal 2015 the Company used a projected long-term non-GAAP tax rate of 4%. When projecting this long-term rate, the Company evaluated its current long-term projections, current tax structure and other factors such as the Company’s existing tax positions in various jurisdictions and key legislations in major jurisdictions where the company operates. The Company intends to re-evaluate this long-term rate only on an annual basis. This long-term non-GAAP tax rate eliminates the effects of non-recurring and period specific items which can vary in size and frequency, and will provide better consistency within the interim reporting periods. This long-term rate could be subject to change for a variety of reasons, for example, significant structural changes in the geographic earnings mix including acquisition activity, or fundamental tax law changes in major jurisdictions where the Company operates.
  • Diluted weighted average shares non-GAAP adjustment, for purposes of calculating non-GAAP diluted net income per share, the GAAP diluted weighted average shares outstanding is adjusted to exclude the benefits of stock compensation expense attributable to future services not yet recognized in the financial statements that are treated as proceeds assumed to be used to repurchase shares under the GAAP treasury method.

IDT and the IDT logo are trademarks or registered 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
Sept. 28, June 29, Sept. 29, Sept. 28, Sept. 29,
  2014     2014     2013     2014     2013  
Revenues $ 137,093 $ 126,302 $ 124,047 $ 263,395 $ 241,511
Cost of revenues   55,217     52,293     53,286     107,510     104,628  
Gross profit 81,876 74,009 70,761 155,885 136,883
Operating expenses:
Research and development 30,742 32,050 38,937 62,792 76,876
Selling, general and administrative   26,795     25,459     27,301     52,254     54,139  
Total operating expenses   57,537     57,509     66,238     115,046     131,015  
 
Operating income   24,339     16,500     4,523     40,839     5,868  
 
Gain from divestiture - - 82,349 - 82,349
Other income, net   405     862     756     1,267     813  
Income from continuing operations before income taxes 24,744 17,362 87,628 42,106 89,030
Provision for income taxes   498     251     217     749     118  
 
Net income from continuing operations 24,246 17,111 87,411 41,357 88,912
 
Discontinued operations:
Gain from divestiture - 16,840 - 16,840 -
Loss from discontinued operations (9,747 ) (12,153 ) (3,935 ) (21,900 ) (7,799 )
Provision for (benefit from) income taxes   57     (45 )   (175 )   12     (274 )
Net income (loss) from discontinued operations (9,804 ) 4,732 (3,760 ) (5,072 ) (7,525 )
 
Net income $ 14,442   $ 21,843   $ 83,651   $ 36,285   $ 81,387  
 
Basic net income per share - continuing operations $ 0.16 $ 0.11 $ 0.58 $ 0.28 $ 0.60
Basic net income (loss) per share - discontinued operations   (0.06 )   0.04     (0.02 )   (0.04 )   (0.05 )
Basic net income per share $ 0.10   $ 0.15   $ 0.56   $ 0.24   $ 0.55  
 
Diluted net income per share - continuing operations $ 0.16 $ 0.11 $ 0.57 $ 0.27 $ 0.59
Diluted net income (loss) per share - discontinued operations   (0.07 )   0.03     (0.03 )   (0.03 )   (0.05 )
Diluted net income per share $ 0.09   $ 0.14   $ 0.54   $ 0.24   $ 0.54  
 
Weighted average shares:
Basic   148,683     149,283     149,814     148,983     148,157  
Diluted   153,784     153,741     153,497     153,816     151,630  
                                     
 
INTEGRATED DEVICE TECHNOLOGY, INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (a)
(Unaudited)
(In thousands, except per share data)
Three Months Ended Six Months Ended
Sept. 28, June 29, Sept. 29, Sept. 28, Sept. 29,
  2014     2014     2013     2014     2013  
 
GAAP net income from continuing operations $ 24,246  

 

$ 17,111   $ 87,411   $ 41,357   $ 88,912  
GAAP diluted net income per share continuing operations $ 0.16  

 

$ 0.11   $ 0.57   $ 0.27   $ 0.59  
Acquisition related:
Amortization of acquisition related intangibles 1,676

 

2,549 3,322 4,225 6,643
Acquisition related legal and consulting fees -

 

- 240 - 708
Restructuring related:
Severance and retention costs 319

 

526 4,499 845 5,673
Facility closure costs 20

 

47 13 67 21
Gain from divestiture -

 

- (82,349 ) - (82,349 )
Assets impairment and other 401

 

2,302 4,080 2,703 4,044
Other:
Stock-based compensation expense 5,929

 

4,962 2,320 10,891 7,140
Compensation expense (benefit) - deferred compensation plan (242 )

 

494 623 252 523
(Gain) loss on deferred compensation plan securities 245

 

(480 ) (619 ) (235 ) (518 )
Tax effects of Non-GAAP adjustments   (826 )

 

  (859 )   (994 )   (1,685 )   (1,656 )
Non-GAAP net income from continuing operations $ 31,768

 

$ 26,652 $ 18,546 $ 58,420 $ 29,141
GAAP weighted average shares - diluted 153,784

 

153,741 153,497 153,816 151,630
Non-GAAP adjustment   2,128  

 

  1,867     3,065     2,017     2,836  
Non-GAAP weighted average shares - diluted   155,912  

 

  155,608     156,562     155,833     154,466  
Non-GAAP diluted net income per share continuing operations $ 0.20  

 

$ 0.17   $ 0.12   $ 0.37   $ 0.19  
 
GAAP gross profit $ 81,876  

 

$ 74,009   $ 70,761   $ 155,885   $ 136,883  
Acquisition related:
Amortization of acquisition related intangibles 1,264

 

1,686 2,435 2,950 4,870
Restructuring related:
Severance and retention costs 96

 

23 86 119

 

87
Facility closure costs -

 

- 4 - 6
Assets impairment and other 334

 

1,935 (38 ) 2,269 (74 )
Other:
Compensation expense (benefit) - deferred compensation plan (70 )

 

147 192 77 161
Stock-based compensation expense   436  

 

  319     392     755     725  
Non-GAAP gross profit $ 83,936  

 

$ 78,119   $ 73,832   $ 162,055   $ 142,658  
 
GAAP R&D expenses: $ 30,742  

 

$ 32,050   $ 38,937   $ 62,792   $ 76,876  
Restructuring related:
Severance and retention costs (136 )

 

(240 ) (2,751 ) (376 ) (3,843 )
Facility closure costs -

 

- (5 ) - (7 )
Assets impairment and other (67 ) (367 ) (4,118 ) (434 ) (4,118 )
Other:
Compensation expense (benefit) - deferred compensation plan 114

 

(240 ) (323 ) (126 ) (271 )
Stock-based compensation expense   (2,464 )

 

  (2,521 )   (383 )   (4,985 )   (2,698 )
Non-GAAP R&D expenses $ 28,189  

 

$ 28,682   $ 31,357   $ 56,871   $ 65,939  
 
GAAP SG&A expenses: $ 26,795  

 

$ 25,459   $ 27,301   $ 52,254   $ 54,139  
Acquisition related:
Amortization of acquisition related intangibles (412 )

 

(863 ) (887 ) (1,275 ) (1,773 )
Acquisition related legal and consulting fees -

 

- (240 ) - (708 )
Restructuring related:
Severance and retention costs (87 )

 

(263 ) (1,662 ) (350 ) (1,743 )
Facility closure costs (20 )

 

(47 ) (4 ) (67 ) (8 )
Other:
Compensation expense (benefit) - deferred compensation plan 58

 

(107 ) (108 ) (49 ) (91 )
Stock-based compensation expense   (3,029 )

 

  (2,122 )   (1,545 )   (5,151 )   (3,717 )
Non-GAAP SG&A expenses $ 23,305  

 

$ 22,057   $ 22,855   $ 45,362   $ 46,099  
 
GAAP interest income and other, net $ 405

 

$ 862 $ 756 $ 1,267 $ 813
(Gain) loss on deferred compensation plan securities   245  

 

  (480 )   (619 )   (235 )   (518 )
Non-GAAP interest income and other, net $ 650  

 

$ 382   $ 137   $ 1,032   $ 295  
 
GAAP provision for income taxes - continuing operations $ 498

 

$ 251 $ 217 $ 749 $ 118
Tax effects of Non-GAAP adjustments   826  

 

  859     994     1,685     1,656  
Non-GAAP provision for income taxes - continuing operations $ 1,324  

 

$ 1,110   $ 1,211   $ 2,434   $ 1,774  
 
(a) Refer to the accompanying “Notes to Non-GAAP Financial Measures” for a detailed discussion of management’s use of non-GAAP financial measures.
                     
 
INTEGRATED DEVICE TECHNOLOGY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
 
Sept. 28, March 30,
(In thousands)   2014   2014
 
ASSETS
Current assets:
Cash and cash equivalents $ 105,020 $ 91,211
Short-term investments 384,493 362,604
Accounts receivable, net 77,437 68,904
Inventories 37,639 49,622
Prepaid and other current assets   10,688   13,034
Total current assets 615,277 585,375
 
Property, plant and equipment, net 65,765 69,827
Goodwill 135,644 135,644
Acquisition-related intangibles 7,882 18,741
Other assets   23,626   21,373
TOTAL ASSETS $ 848,194 $ 830,960
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 27,002 $ 25,442
Accrued compensation and related expenses 28,456 24,343
Deferred income on shipments to distributors 15,497 14,006
Deferred taxes liabilities 1,440 1,346
Other accrued liabilities   14,605   11,525
Total current liabilities 87,000 76,662
 
Deferred tax liabilities 1,494 1,494
Long term income taxes payable 272 266
Other long term obligations   18,444   18,683
Total liabilities 107,210 97,105
 
Stockholders' equity   740,984   733,855
 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 848,194 $ 830,960

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