IDT Reports Fiscal 2018 Q1 Financial Results

Forward Looking Statements

Investors are cautioned that forward-looking statements in this release, including but not limited to statements regarding demand for Company products, anticipated trends in Company sales, expenses and profits, 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 introduction 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, 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 fiscal year ended April 3, 2016. All forward-looking statements are made as of the date of this release and the Company disclaims any duty to update such statements.

Non-GAAP Reporting

To supplement its consolidated financial results presented in accordance with GAAP, IDT uses non-GAAP financial measures which are adjusted from the most directly comparable GAAP financial measures to exclude certain items, as described in detail below. Management believes that these non-GAAP financial measures reflect an additional and useful way of viewing aspects of the Company's operations that, when viewed in conjunction with IDT's GAAP results, provide a more comprehensive understanding of the various factors and trends affecting the Company's business and operations. It should also be noted that IDT's non-GAAP information may be different from the non-GAAP information provided by other companies. Non-GAAP financial measures used by IDT include:


--  Cost of revenues; 
--  Gross profit; 
--  Research and development expenses; 
--  Selling, general and administrative expenses; 
--  Interest and other income (expense); 
--  Provision for (benefit from) income taxes; 
--  Operating income; 
--  Net income; 
--  Diluted net income per share; and 
--  Weighted average shares outstanding - diluted 

The Company presents non-GAAP financial measures because the investor community uses non-GAAP results in its analysis and comparison of historical results and projections of the Company's future operating results. These non-GAAP results exclude acquisition related expense, restructuring and divestiture related costs (gain), share-based compensation expense, results from discontinued operations, and certain other expenses and benefits. Management uses these non-GAAP measures to manage and assess the profitability of the business. These non-GAAP results are also consistent with the way management internally analyzes IDT's financial results.

There are limitations in using non-GAAP financial measures because they are not prepared in accordance with GAAP and may be different from non-GAAP financial measures used by other companies. The presentation of non-GAAP financial information is not meant to be considered in isolation or as a substitute for the most directly comparable GAAP financial measures. The non-GAAP financial measures supplement, and should be viewed in conjunction with, GAAP financial measures. Investors should review the reconciliations of the non-GAAP financial measures to their most directly comparable GAAP financial measures as provided in the accompanying press release.

As presented in the "Reconciliation of GAAP to Non-GAAP" tables in the accompanying press release, each of the non-GAAP financial measures excludes one or more of the following items:

Acquisition related. Acquisition-related charges are not factored into management's evaluation of potential acquisitions or IDT's performance after completion of acquisitions, because they are not related to the Company's core operating performance. Adjustments of these items provide investors with a basis to compare IDT's performance to other companies without the variability caused by purchase accounting. Acquisition-related expenses primarily include:


--  Amortization of acquisition related intangibles, which include acquired
    intangibles such as purchased technology, patents, customer
    relationships, trademarks, backlog and non-compete agreements. 
--  Acquisition related costs such as legal, accounting and other
    professional or consulting fees directly related to an acquisition. 
--  Fair market value adjustment to acquired inventory sold. 

Restructuring related. Restructuring charges primarily relate to changes in IDT's infrastructure in efforts to reduce costs and expenses (gains) associated with strategic divestitures and restructuring in force actions. Restructuring charges (gains) are excluded from non-GAAP financial measures because they are not considered core operating activities. Although IDT has engaged in various restructuring activities in the past, each has been a discrete event based on a unique set of business objectives. As such, management believes that it is appropriate to exclude restructuring charges (gains) from IDT's non-GAAP financial measures as it enhances the ability of investors to compare the Company's period-over-period operating results. Restructuring-related charges (gains) primarily include:

--  Severance and retention costs directly related to a restructuring
    action. 
--  Facility closure costs consist of ongoing costs associated with the exit
    of our leased and owned facilities. 
--  Gain on divestiture consists of gains recognized upon the strategic sale
    of business units. 
--  Assets impairments including accelerated depreciation of certain assets
    no longer in use. 

Other adjustments. These items are excluded from non-GAAP financial measures because they are not related to the core operating activities and on-going future operating performance of IDT. Excluding this data allows investors to better compare IDT's period-over-period performance without such expense, which IDT believes may be useful to the investor community.

Other adjustments primarily include:


--  Stock based compensation expense. 
--  Compensation expense (benefit) - deferred compensation, consists of
    gains and losses on marketable equity securities related to our deferred
    compensation arrangements. 
--  Non-cash interest expense, consists of amortization of issuance cost and
    accretion of discount related to the convertible notes. 
--  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. 
--  Unrealized foreign currency gains and losses resulting from
    remeasurement of certain non-functional currency account balances. 
--  Tax effects of non-GAAP adjustments. Non-GAAP tax calculation is based
    on estimated cash tax expense and reserves. The Company forecasts its
    annual cash tax liability and allocates the tax to each quarter in
    proportion to earnings for that period. This approach is designed to
    enhance the ability of investors to understand the impact of the
    Company's tax expense on its current operations, provide improved
    modeling accuracy, and substantially reduce fluctuations caused by GAAP
    to non-GAAP adjustments, which may not reflect actual cash tax expense. 
--  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                  
                                                                                ------------------------------------
                                                                                          July  2          April  2            July  3  
                                                                                              2017                2017                2016  
                                                                                ------------------------------------
Revenues                                                                    $  196,713      $  175,698      $  192,128  
Cost  of  revenues                                                          86,675            74,026            83,779  
                                                                                ------------------------------------
Gross  profit                                                                110,038          101,672          108,349  
Operating  expenses:                                                                                                                  
    Research  and  development                                      48,449            35,533            49,648  
    Selling,  general  and  administrative                41,942            36,225            38,816  
                                                                                ------------------------------------
Total  operating  expenses                                          90,391            71,758            88,464  
                                                                                ------------------------------------
                                                                                                                                                        
Operating  income                                                          19,647            29,914            19,885  
Interest  and  other  expense,  net                            (3,915)          (2,153)          (2,496)
                                                                                                                                                        
                                                                                ------------------------------------
Income  before  income  taxes                                      15,732            27,761            17,389  
Benefit  from  income  taxes                                            (982)          (2,448)          (3,558)
                                                                                ------------------------------------
                                                                                                                                                        
                                                                                                                                                        
Net  income                                                                $    16,714      $    30,209      $    20,947  
                                                                                ====================================
                                                                                                                                                        
                                                                                                                                                        
Basic  net  income  per  share                                $        0.13      $        0.23      $        0.16  
                                                                                ====================================
Diluted  net  income  per  share                            $        0.12      $        0.22      $        0.15  
                                                                                ====================================
                                                                                                                                                        
Weighted  average  shares:                                                                                                        
Basic                                                                              133,302          133,309          133,934  
                                                                                ====================================
Diluted                                                                          136,642          136,903          138,109  
                                                                                ====================================
                                                                                                                                                        
                                                                                                                                                        
                                                                                                                                                        
                                                                                                                                                        
                                          INTEGRATED  DEVICE  TECHNOLOGY,  INC.                                          
                  RECONCILIATION  OF  GAAP  TO  NON-GAAP  FINANCIAL  MEASURES  (a)                    
                                                                (Unaudited)                                                                  
                                                                                                                                                        
(In  thousands,  except  per  share  data)                                                                              
                                                                                                  Three  Months  Ended                  
                                                                                ------------------------------------
                                                                                          July  2          April  2            July  3  
                                                                                              2017                2017                2016  
                                                                                ------------------------------------
                                                                                                                                                        
GAAP  net  income                                                      $    16,714      $    30,209      $    20,947  
                                                                                ====================================
GAAP  diluted  net  income  per  share                  $        0.12      $        0.22      $        0.15  
                                                                                ====================================
    Acquisition  related:                                                                                                            
        Amortization  of  acquisition  related                                                                          
          intangibles                                                            8,876              4,782              5,775  
        Acquisition  related  costs                                  2,225              2,223                      -  
        Amortization  of  fair  market  value                                                                              
          adjustment  to  inventory                                    4,081                  407              2,395  
    Restructuring  related:                                                                                                        
        Severance  and  retention  costs                                                                                      
          (benefit)                                                                    653                (387)          11,918  
        Facility  closure  costs                                                -                      -                    19  
        Assets  impairment  and  other                              1,965                  156                  870  
    Other:                                                                                                                                        
        Stock-based  compensation  expense                  11,820            10,266            10,515  
        Non-cash  interest  expense                                  3,892              3,393              3,268  
        Certain  foreign  exchange  gain                        (1,675)                    -                      -  
        Compensation  expense  -  deferred                                                                                  
          compensation  plan                                                    412                  486                  402  
        Gain  on  deferred  compensation  plan                                                                            
          securities                                                                (360)              (474)              (392)
        Non-GAAP  tax  adjustments                                  (3,341)          (2,942)          (4,540)
                                                                                ------------------------------------
Non-GAAP  net  income                                              $    45,262      $    48,119      $    51,177  
                                                                                ------------------------------------
GAAP  weighted  average  shares  -  diluted            136,642          136,903          138,109  
        Non-GAAP  adjustment                                              2,319              1,596              2,287  
                                                                                ------------------------------------
Non-GAAP  weighted  average  shares  -                                                                                    
  diluted                                                                        138,961          138,499          140,396  
                                                                                ------------------------------------
Non-GAAP  diluted  net  income  per  share          $        0.33      $        0.35      $        0.36  
                                                                                ====================================
                                                                                                                                                        
GAAP  gross  profit                                                  $  110,038      $  101,672      $  108,349  
                                                                                ------------------------------------
    Acquisition  related:                                                                                                            
        Amortization  of  acquisition  related                                                                          
          intangibles                                                            5,682              3,116              3,415  
        Amortization  of  fair  market  value                                                                              
          adjustment  to  inventory                                    4,081                  407              2,395  
    Restructuring  related:                                                                                                        
        Severance  and  retention  costs                                                                                      
          (benefit)                                                                    196                  (36)            2,430  
        Assets  impairment  and  other                                      -                  156                  336  
    Other:                                                                                                                                        
        Compensation  expense  -  deferred                                                                                  
          compensation  plan                                                      97                  114                  148  
        Stock-based  compensation  expense                        632                  660                  779  
                                                                                ------------------------------------
Non-GAAP  gross  profit                                          $  120,726      $  106,089      $  117,852  
                                                                                ------------------------------------
                                                                                                                                                        
GAAP  R&D  expenses:                                                $    48,449      $    35,533      $    49,648  
                                                                                ------------------------------------
    Restructuring  related:                                                                                                        
        Severance  and  retention  costs                              (45)                (44)          (7,334)
        Assets  impairment  and  other                            (1,965)                    -                (107)
    Other:                                                                                                                                        
        Compensation  expense  -  deferred                                                                                  
          compensation  plan                                                  (210)              (248)              (157)
        Stock-based  compensation  expense                  (5,963)          (4,226)          (4,308)
                                                                                ------------------------------------
Non-GAAP  R&D  expenses                                          $    40,266      $    31,015      $    37,742  
                                                                                ------------------------------------
                                                                                                                                                        
GAAP  SG&A  expenses:                                              $    41,942      $    36,225      $    38,816  
                                                                                ------------------------------------
    Acquisition  related:                                                                                                            
        Amortization  of  acquisition  related                                                                          
          intangibles                                                          (3,194)          (1,666)          (2,360)
        Acquisition  related  costs                                (2,225)          (2,223)                    -  
    Restructuring  related:                                                                                                        
        Severance  and  retention  benefit                                                                                  
          (costs)                                                                      (412)                395            (2,154)
        Facility  closure  costs                                                -                      -                  (18)
        Assets  impairment  and  other                                      -                      -                (428)
    Other:                                                                                                                                        
        Compensation  expense  -  deferred                                                                                  
          compensation  plan                                                  (105)              (124)                (98)
        Stock-based  compensation  expense                  (5,225)          (5,380)          (5,428)
                                                                                ------------------------------------
Non-GAAP  SG&A  expenses                                        $    30,781      $    27,227      $    28,330  
                                                                                ------------------------------------
                                                                                                                                                        
GAAP  interest  and  other  expense,  net            $    (3,915)    $    (2,153)    $    (2,496)
        Non-cash  interest  expense                                  3,892              3,393              3,268  
        Gain  on  deferred  compensation  plan                                                                            
          securities                                                                (360)              (474)              (393)
        Certain  foreign  exchange  gain                        (1,675)                    -                      -  
                                                                                ------------------------------------
Non-GAAP  interest  and  other  income                                                                                    
  (expense),  net                                                      $    (2,058)    $          766      $          379  
                                                                                ------------------------------------
                                                                                                                                                        
GAAP  benefit  from  income  taxes                        $        (982)    $    (2,448)    $    (3,558)
        Non-GAAP  tax  adjustments                                    3,341              2,942              4,540  
                                                                                ------------------------------------
Non-GAAP  provision  for  income  taxes              $      2,359      $          494      $          982  
                                                                                ------------------------------------
                                                                                                                                                        
                                                                                                                                                        
                                                                                                                                                        
(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)                                                            
                                                                                                                                              
                                                                                                        July  2            April  2
(In  thousands)                                                                                2017                  2017
                                                                                          --------------------------
                                                                                                                                              
ASSETS                                                                                                                                  
Current  assets:                                                                                                                
Cash  and  cash  equivalents                                            $      144,533    $      214,554
Short-term  investments                                                          213,661            191,492
Accounts  receivable,  net                                                      103,433              89,312
Inventories                                                                                  71,371              52,288
Prepayments  and  other  current  assets                                14,157              13,054
                                                                                          --------------------------
Total  current  assets                                                              547,155            560,700
                                                                                                                                              
Property,  plant  and  equipment,  net                                    84,696              80,961
Goodwill                                                                                      420,117            306,925
Intangible  assets,  net                                                          195,441            108,818
Deferred  tax  assets                                                                  93,936              85,831
Other  assets                                                                                42,657              40,399
                                                                                          --------------------------
TOTAL  ASSETS                                                                      $  1,384,002    $  1,183,634
                                                                                          ==========================
                                                                                                                                              
LIABILITIES  AND  STOCKHOLDERS'  EQUITY                                                                      
Current  liabilities:                                                                                                      
Accounts  payable                                                              $        41,266    $        42,020
Accrued  compensation  and  related  expenses                      23,552              26,624
Deferred  income  on  shipments  to  distributors                  2,218                1,985
Current  portion  of  bank  loan                                                  2,000                        -
Other  accrued  liabilities                                                      20,843              20,205
                                                                                          --------------------------
Total  current  liabilities                                                      89,879              90,834
                                                                                                                                              
Deferred  tax  liabilities                                                        12,160              13,835
Convertible  notes                                                                    288,978            285,542
Long-term  bank  loan,  net                                                      191,957                        -
Other  long-term  liabilities                                                  25,422              19,760
                                                                                          --------------------------
Total  liabilities                                                                    608,396            409,971
                                                                                                                                              
Stockholders'  equity                                                              775,606            773,663
                                                                                          --------------------------
                                                                                                                                              
TOTAL  LIABILITIES  AND  STOCKHOLDERS'  EQUITY          $  1,384,002    $  1,183,634
                                                                                          ==========================
                                                                                                                                              
                                                                                                                                              
                                                                                                                                              

 




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