IDT Reports Q3 Fiscal Year 2014 Financial Results

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.
Expenses related to stockholder activities reflect advisory fees related to inquiries of Starboard Value LP.
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.
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									Nine Months Ended
	Dec. 29,			Sept. 29,			Dec. 30,			Dec. 29,			Dec. 30,
	2013			2013			2012			2013			2012
Revenues	$	124,628		$	124,047		$	114,277		$	366,139		$	376,673
Cost of revenues		49,689			53,286			51,203			154,317			166,472
Gross profit		74,939			70,761			63,074			211,822			210,201
Operating expenses:
Research and development		31,063			38,937			36,700			107,939			117,375
Selling, general and administrative		23,687			27,301			25,871			77,826			89,864
Total operating expenses		54,750			66,238			62,571			185,765			207,239

Operating income		20,189			4,523			503			26,057			2,962

Gain (loss) from divestiture		(3,415	)		82,349			-			78,934			-
Other income (expense), net		1,108			756			(344	)		1,921			1,450
Income from continuing operations before income taxes		17,882			87,628			159			106,912			4,412
Income tax expense (benefit)		543			217			265			661			(3,768	)

Net income (loss) from continuing operations		17,339			87,411			(106	)		106,251			8,180

Discontinued operations:
Gain from divestiture		-			-			-			-			886
Loss from discontinued operations		(10,123	)		(3,935	)		(5,115	)		(17,922	)		(18,658	)
Income tax expense		268			(175	)		(64	)		(6	)		(47	)
Net loss from discontinued operations		(10,391	)		(3,760	)		(5,051	)		(17,916	)		(17,725	)

Net income (loss)	$	6,948		$	83,651		$	(5,157	)	$	88,335		$	(9,545	)

Basic net income (loss) per share continuing operations	$	0.11		$	0.58		$	-		$	0.71		$	0.06
Basic net loss per share discontinued operations		(0.06	)		(0.02	)		(0.04	)		(0.12	)		(0.13	)
Basic net income (loss) per share	$	0.05		$	0.56		$	(0.04	)	$	0.59		$	(0.07	)

Diluted net income (loss) per share continuing operations	$	0.11		$	0.57		$	-		$	0.70		$	0.06
Diluted net loss per share discontinued operations		(0.07	)		(0.03	)		(0.04	)		(0.12	)		(0.13	)
Diluted net income (loss) per share	$	0.04		$	0.54		$	(0.04	)	$	0.58		$	(0.07	)

Weighted average shares:
Basic		151,018			149,814			144,321			148,835			143,477
Diluted		155,035			153,497			144,321			152,560			144,760

INTEGRATED DEVICE TECHNOLOGY, INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (a)
(Unaudited)
(In thousands, except per share data)
	Three Months Ended									Nine Months Ended
	Dec. 29,			Sept. 29,			Dec. 30,			Dec. 29,			Dec. 30,
	2013			2013			2012			2013			2012

GAAP net income (loss) from continuing operations	$	17,339		$	87,411		$	(106	)	$	106,251		$	8,180
GAAP diluted net income (loss) per share continuing operations	$	0.11		$	0.57		$	-		$	0.70		$	0.06
Acquisition related:
Amortization of acquisition related intangibles		3,322			3,322			3,361			9,965			12,242
Acquisition related legal and consulting fees		21			240			2,460			729			10,229
Other acquisition related costs		-			-			-			-			-
Fair market value adjustment to acquired inventory sold		-			-			-			-			358
Restructuring related:
Severance and retention costs		400			4,499			908			6,073			3,860
Facility closure costs		6			13			13			27			60
Loss (gain) on divestiture		3,415			(82,349	)		-			(78,934	)		-
Assets impairment and other		(151	)		4,080			(57	)		3,893			(175	)
Other:
Stock-based compensation expense		3,169			2,320			2,636			10,309			9,241
Expenses related to stockholder activities		-			-			-			-			2,614
Compensation expense (benefit)—deferred compensation plan		557			623			87			1,080			431
Gain on deferred compensation plan securities		(627	)		(619	)		(82	)		(1,145	)		(245	)
Life insurance proceeds received		-			-			-			-			(2,313	)
Tax effects of Non-GAAP adjustments		(1,402	)		(994	)		(524	)		(3,058	)		(9,291	)
Non-GAAP net income from continuing operations	$	25,935		$	18,546		$	9,280		$	55,076		$	35,775
GAAP weighted average shares - diluted		155,035			153,497			144,321			152,560			144,760
Non-GAAP adjustment		2,099			3,065			3,362			2,659			1,747
Non-GAAP weighted average shares - diluted		157,134			156,562			147,683			155,219			146,507
Non-GAAP diluted net income per share continuing operations	$	0.17		$	0.12		$	0.06		$	0.35		$	0.24

GAAP gross profit		74,939			70,761			63,074			211,822			210,201
Acquisition and divestiture related:
Amortization of acquisition related intangibles		2,435			2,435			2,474			7,305			9,673
Fair market value adjustment to acquired inventory sold		-			-			-			-			358
Restructuring related:
Severance and retention costs		-			86			-			87			607
Facility closure costs		2			4			4			8			13
Assets impairment and other		(28	)		(38	)		(57	)		(102	)		(175	)
Other:
Assets impairment & other		(114	)		-			584			(114	)		584
Compensation expense (benefit)—deferred compensation plan		172			192			21			333			107
Stock-based compensation expense		403			392			295			1,128			850
Non-GAAP gross profit		77,809			73,832			66,395			220,467			222,218

GAAP R&D expenses:		31,063			38,937			36,700			107,939			117,375
Restructuring related:
Severance and retention costs		(86	)		(2,751	)		(912	)		(3,929	)		(2,322	)
Facility closure costs		(2	)		(5	)		(5	)		(9	)		(37	)
Other:
Assets impairment & other		123			(4,118	)		-			(3,995	)		-
Compensation expense (benefit)—deferred compensation plan		(289	)		(323	)		(53	)		(560	)		(261	)
Stock-based compensation expense		(1,514	)		(383	)		(1,401	)		(4,212	)		(4,690	)
Non-GAAP R&D expenses		29,295			31,357			34,329			95,234			110,065

GAAP SG&A expenses:		23,687			27,301			25,871			77,826			89,864
Acquisition and divestiture related:
Amortization of acquisition related intangibles		(887	)		(887	)		(887	)		(2,660	)		(2,569	)
Acquisition related legal and consulting fees		(21	)		(240	)		(2,460	)		(729	)		(10,229	)
Restructuring related:
Severance and retention costs		(314	)		(1,662	)		4			(2,057	)		(931	)
Facility closure costs		(2	)		(4	)		(4	)		(10	)		(10	)
Other:
Compensation expense (benefit)—deferred compensation plan		(96	)		(108	)		(13	)		(187	)		(63	)
Stock-based compensation expense		(1,252	)		(1,545	)		(940	)		(4,969	)		(3,701	)
Expenses related to stockholder activities		-			-			-			-			(2,614	)
Non-GAAP SG&A expenses		21,115			22,855			21,571			67,214			69,747

GAAP interest income and other, net		1,108			756			(344	)		1,921			1,450
Gain on deferred compensation plan securities		(627	)		(619	)		(82	)		(1,145	)		(245	)
Life insurance proceeds received		-			-			-			-			(2,313	)
Non-GAAP interest income and other, net		481			137			(426	)		776			(1,108	)

GAAP provision (benefit) for income taxes continuing operations		543			217			265			661			(3,768	)
Tax effects of Non-GAAP adjustments (7)		1,402			994			524			3,058			9,291
Non-GAAP provision for income taxes continuing operations		1,945			1,211			789			3,719			5,523

(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)

	Dec. 29,		March 31,
(In thousands)	2013		2013

ASSETS
Current assets:
Cash and cash equivalents	$	104,628	$	130,837
Short-term investments		333,670		166,333
Accounts receivable, net		65,774		62,083
Inventories		53,332		56,555
Prepaid and other current assets		15,397		24,697
Total current assets		572,801		440,505

Property, plant and equipment, net		71,716		74,988
Goodwill		135,644		144,924
Acquisition-related intangibles		33,173		48,602
Other assets		18,480		19,560
TOTAL ASSETS	$	831,814	$	728,579

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	22,822	$	23,244
Accrued compensation and related expenses		22,545		21,090
Deferred income on shipments to distributors		13,374		14,539
Deferred taxes liabilities		1,150		1,000
Other accrued liabilities		10,646		14,652
Total current liabilities		70,537		74,525

Deferred tax liabilities		1,552		1,552
Long term income taxes payable		305		454
Other long term obligations		19,539		22,022
Total liabilities		91,933		98,553

Stockholders' equity		739,881		630,026

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	831,814	$	728,579

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