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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