IDT Reports Q3 Fiscal Year 2013 Financial Results

  IDT Reports Q3 Fiscal Year 2013 Financial Results

Business Wire

SAN JOSE, Calif. -- January 28, 2013

Integrated Device Technology, Inc. (IDT^® or the Company) (NASDAQ: IDTI), the
Analog and Digital Company™ delivering essential mixed-signal semiconductor
solutions, today announced results for the fiscal third quarter ended December
30, 2012.

“We delivered Q3 results within the range of our prior projections despite
continued broad-based weakness in demand,” said Dr. Ted Tewksbury, president
and CEO of IDT. “Our bottom line results hit the midpoint of our prior
projections due to reduced operating expenses and improved product mix. We
also generated healthy cash flow from operations during the quarter,
highlighting the resilience of our operating model in the face of a weak
macroeconomic environment.”

“Although visibility into near term demand is limited, design win activity
remains strong and we expect top line growth from new product categories to
accelerate in the second half of this calendar year, led by wireless power and
enterprise flash controllers. In addition, we believe that improvement in our
core business and continued operating expense reductions will enable us to
achieve significant operating margin expansion in fiscal year 2014.”

Recent Highlights

IDT recently announced:

  *The industry’s most integrated wireless power transmitter solutions for
    the Wireless Power Consortium (WPC) Tx-A5, Tx-A6, and Tx-A11
    configurations. The new products expand IDT's portfolio of WPC
    Qi-compliant magnetic induction transmitters with solutions optimized for
    single-coil 5V and three-coil 12V applications.
  *A new RF digital step attenuator that reduces glitches by up to 95 percent
    in cellular base station and industrial applications, enabling customers
    to simplify their software interface, improve reliability, and prevent
    damage to expensive sub-assemblies such as power amplifiers.
  *The industry’s first low-power dual 16-bit 1.5 GSPS digital-to-analog
    converter (DAC) with an advanced JESD204B serial interface for
    multi-carrier broadband wireless applications. The new high-speed DAC
    delivers best-in-class dynamic performance, eases system-level cooling
    requirements, and simplifies board routing.
  *The industry’s first high-performance quad frequency MEMS oscillators with
    multiple synchronous outputs. IDT’s enhanced MEMS oscillators offer
    configurable outputs in an industry-standard package footprint, saving
    board area in communication, networking, and storage applications.
  *The availability of the industry’s first complete chipset for DDR4 load
    reduced dual inline memory modules (LRDIMMs). The clear advantages
    afforded by LRDIMMs as a speed-scalable memory technology are expected to
    drive adoption across a broad array of memory intensive computing and
    storage applications and IDT is leading the way with DDR4 LRDIMM memory
    interface solutions.
  *It was recognized with a product of the year award from Electronic
    Products Magazine and a 2012 best electronic design award from Electronic
    Design Magazine for its NVM Express (NVMe) enterprise flash controller.
    The PCIe Gen3 flash controller family provides a standard solution for PCI
    Express based SSDs, enabling enterprise storage and server OEMs to
    dramatically improve latency and throughput performance.

The following highlights the Company’s financial performance on both a GAAP
and supplemental non-GAAP basis. The Company provides supplemental information
regarding its operating performance on a non-GAAP basis that excludes certain
gains, losses and charges which occur relatively infrequently and which
management considers to be outside our core operating results. Non-GAAP
results are not in accordance with GAAP and may not be comparable to non-GAAP
information provided by other companies. Non-GAAP information should be
considered a supplement to, and not a substitute for, financial statements
prepared in accordance with GAAP. A complete reconciliation of GAAP to
non-GAAP results from continuing operations is attached to this press release.

  *Revenue from continuing operations for the fiscal third quarter of 2013
    was $115.1 million, compared with $120.0 million reported in the same
    period one year ago.
  *GAAP net loss from continuing operations for the fiscal third quarter of
    2013 was $5.2 million, or a loss of $0.04 per diluted share, versus GAAP
    net loss of $0.9 million or a loss of $0.01 per diluted share in the same
    period one year ago. Fiscal third quarter 2013 GAAP results include $9.1
    million in acquisition and restructuring related charges, $2.8 million in
    stock-based compensation, and $0.6 million in benefits from tax effects.
  *Non-GAAP net income from continuing operations for the fiscal third
    quarter of 2013 was $6.2 million or $0.04 per diluted share, compared with
    non-GAAP net income from continuing operations of $8.5 million or $0.06
    per diluted share reported in the same period one year ago.
  *GAAP gross profit for the fiscal third quarter of 2013 was $63.0 million,
    or 54.7 percent, compared with GAAP gross profit of $63.9 million, or 53.2
    percent, reported in the same period one year ago. Non-GAAP gross profit
    for the fiscal third quarter of 2013 was $66.7 million, or 58.0 percent,
    compared with non-GAAP gross profit of $65.7 million, or 54.7 percent,
    reported in the same period one year ago.
  *GAAP R&D expense for the fiscal third quarter of 2013 was $40.2 million,
    compared with GAAP R&D expense of $38.4 million reported in the same
    period one year ago. Non-GAAP R&D expense for the fiscal third quarter of
    2013 was $37.7 million, compared with non-GAAP R&D of $34.9 million in the
    same period one year ago.
  *GAAP SG&A expense for the fiscal third quarter of 2013 was $27.4 million,
    compared with GAAP SG&A expense of $23.7 million in the same period one
    year ago. Non-GAAP SG&A expense for the fiscal third quarter of 2013 was
    $21.7 million, compared with non-GAAP SG&A expense of $20.6 million in the
    same period one year ago.

Webcast and Conference Call Information

Investors can listen to a live or replay webcast of the Company’s quarterly
financial conference call at http://ir.idt.com/. The live webcast will begin
at 1:30 p.m. Pacific time on January 28, 2013. The webcast replay will be
available after 5 p.m. Pacific time on January 28, 2013.

Investors can also listen to the live call at 1:30 p.m. Pacific time on
January 28, 2013 by calling (800) 230-1092 or (612) 288-0329. The conference
call replay will be available after 5 p.m. Pacific time on January 28, 2013
through 11:59 p.m. Pacific time on February 4, 2013 at (800) 475-6701 or (320)
365-3844. The access code is 278455.

About IDT

Integrated Device Technology, Inc., the Analog and Digital Company™, develops
system-level solutions that optimize its customers’ applications. IDT uses its
market leadership in timing, serial switching and interfaces, and adds analog
and system expertise to provide complete application-optimized, mixed-signal
solutions for the communications, computing and consumer segments.
Headquartered in San Jose, Calif., IDT has design, manufacturing and sales
facilities throughout the world. IDT stock is traded on the NASDAQ Global
Select Stock Market® under the symbol “IDTI.” Additional information about IDT
is accessible at www.IDT.com. Follow IDT on Facebook, LinkedIn, Twitter, and
YouTube.

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 1, 2012. 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

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 restructuring-related costs, acquisition and
divestiture-related charges, share-based compensation expense, results from
discontinued operations, stockholder expenses 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
another way management internally analyzes IDT’s results and may be useful to
investor community. The Company has reconciled non-GAAP results to the most
directly comparable GAAP financial measures in the financial tables at the end
of this press release.

Reference to these non-GAAP results should be considered in addition to
results that are prepared under general accepted accounting standards in the
United States (GAAP), but should not be considered a substitute for results
that are presented in accordance with GAAP. It should also be noted that IDT's
non-GAAP information may be different from the non-GAAP information provided
by other companies.

  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. 30,     Sept. 30,    Jan. 1,       Dec. 30,     Jan. 1,
                        2012        2012        2012        2012        2012    
Revenues               $ 115,147     $ 133,401     $ 119,977     $ 378,709     $ 407,580
Cost of revenues        52,200      58,774      56,093      168,622     190,627 
Gross profit             62,947        74,627        63,884        210,087       216,953
Operating expenses:
Research and             40,170        42,387        38,410        124,101       117,409
development
Selling, general and    27,389      32,750      23,661      96,551      74,478  
administrative
Total operating         67,559      75,137      62,071      220,652     191,887 
expenses
                                                                               
Operating income        (4,612  )    (510    )    1,813       (10,565 )    25,066  
(loss)
                                                                               
Other-than-temporary
impairment loss on       -             -             (2,130  )     -             (2,130  )
investments
Other income            (344    )    (206    )    (10     )    1,450       (1,794  )
(expense), net
Income (loss) from
continuing               (4,956  )     (716    )     (327    )     (9,115  )     21,142
operations before
income taxes
Provision (benefit)     201         (33     )    576         (3,818  )    1,176   
for income taxes
                                                                               
Net income (loss)
from continuing          (5,157  )     (683    )     (903    )     (5,297  )     19,966
operations
                                                                               
Discontinued
operations:
Gain from                -             886           -             886           45,939
divestiture
Loss from
discontinued             -             (273    )     (5,290  )     (5,131  )     (20,286 )
operations
Provision (benefit)     -           3           -           3           (89     )
for income taxes
Net income (loss)
from discontinued        -             610           (5,290  )     (4,248  )     25,742
operations
                                                                               
Net income (loss)      $ (5,157  )   $ (73     )   $ (6,193  )   $ (9,545  )   $ 45,708  
                                                                               
Basic net income
(loss) per share       $ (0.04   )   $ -           $ (0.01   )   $ (0.04   )   $ 0.14
continuing
operations
Basic net income
(loss) per share        -           -           (0.03   )    (0.03   )    0.18    
discontinued
operations
Basic net income       $ (0.04   )   $ -          $ (0.04   )   $ (0.07   )   $ 0.32    
(loss) per share
                                                                               
Diluted net income
(loss) per share       $ (0.04   )   $ -           $ (0.01   )   $ (0.04   )   $ 0.14
continuing
operations
Diluted net income
(loss) per share        -           -           (0.03   )    (0.03   )    0.17    
discontinued
operations
Diluted net income     $ (0.04   )   $ -          $ (0.04   )   $ (0.07   )   $ 0.31    
(loss) per share
                                                                               
Weighted average
shares:
Basic                   144,321     143,519     141,839     143,477     144,792 
Diluted                 144,321     143,519     141,839     143,477     146,706 
                                                                               

INTEGRATED DEVICE TECHNOLOGY, INC.
RECONCILIATION OF GAAP TO NON-GAAP
(Unaudited)
(In thousands, except per share data)
                      Three Months Ended                         Nine Months Ended
                       Dec. 30,     Sept. 30,    Jan. 1,           Dec. 30,     Jan. 1,
                        2012        2012        2012            2012        2011    
                                                                                   
GAAP net income
(loss) from            $ (5,157  )   $ (683    )   $ (903    )       $ (5,297  )   $ 19,966  
continuing
operations
GAAP diluted net
income (loss) per      $ (0.04   )   $ -          $ (0.01   )       $ (0.04   )   $ 0.14    
share continuing
operations
Acquisition related:
Amortization of
acquisition related      4,673         5,573         4,006             15,137        11,995
intangibles
Acquisition related
legal and consulting     2,999         3,630         109               11,465        109
fees (1)
Other acquisition        -             1,200         -                 3,000         -
related costs (2)
Assets impairment        527           (59     )     (73     )         409           (255    )
(3)
Fair market value
adjustment to            -             100           -                 458           -
acquired inventory
sold
Restructuring
related:
Severance and            908           2,237         (1,978  )         3,860         625
retention costs
Facility closure         13            34            16                60            39
costs (4)
Fabrication
production transfer      -             -             1,233             -             3,894
costs (5)
Other:
                                                                                   
Other-than-temporary
impairment loss on       -             -             2,130             -             2,130
investments
Stock-based              2,774         3,617         4,312             9,513         12,366
compensation expense
Expenses related to
stockholder              -             38            -                 2,614         -
activities (6)
Compensation expense
(benefit)—deferred       87            480           649               431           (632    )
compensation plan
(7)
Loss (gain) on
deferred                 (82     )     (477    )     (629    )         (245    )     685
compensation plan
securities (7)
Life insurance
proceeds received        -             -             -                 (2,313  )     -
(7)
Tax effects of          (588    )    (3,076  )    (347    )        (9,341  )    (1,413  )
Non-GAAP adjustments
Non-GAAP net income
from continuing        $ 6,154       $ 12,614      $ 8,525           $ 29,751      $ 49,509
operations
GAAP weighted
average shares -         144,321       143,519       141,839           143,477       146,706
diluted
Non-GAAP adjustment     3,362       2,907       2,676           3,030       1,835   
Non-GAAP weighted
average shares -        147,683     146,426     144,515         146,507     148,541 
diluted (8)
Non-GAAP diluted net
income per share       $ 0.04       $ 0.09       $ 0.06           $ 0.20       $ 0.33    
continuing
operations
                                                                                   
GAAP gross profit       62,947      74,627      63,884          210,087     216,953 
Acquisition and
divestiture related:
Amortization of
acquisition related      2,944         3,890         2,733             10,456        8,834
intangibles
Assets impairment        527           (59     )     (73     )         409           (255    )
(3)
Fair market value
adjustment to            -             100           -                 458           -
acquired inventory
sold
Restructuring
related:
Severance and            -             306           (2,784  )         607           (824    )
retention costs
Facility closure         4             3             3                 13            1
costs (4)
Fabrication
production transfer      -             -             1,233             -             3,894
costs (5)
Other:
Compensation expense
(benefit)—deferred       21            120           140               107           (137    )
compensation plan
(7)
Stock-based             295         252         535             850         1,415   
compensation expense
Non-GAAP gross          66,738      79,239      65,671          222,987     229,881 
profit
                                                                                   
GAAP R&D expenses:      40,170      42,387      38,410          124,101     117,409 
Restructuring
related:
Severance and            (912    )     (1,070  )     (870    )         (2,322  )     (1,473  )
retention costs
Facility closure         (5      )     (28     )     (4      )         (37     )     (14     )
costs (4)
Other:
Compensation expense
(benefit)—deferred       (53     )     (290    )     (421    )         (261    )     409
compensation plan
(7)
Stock-based             (1,531  )    (1,873  )    (2,174  )        (4,946  )    (6,493  )
compensation expense
Non-GAAP R&D            37,669      39,126      34,941          116,535     109,838 
expenses
                                                                                   
GAAP SG&A expenses:     27,389      32,750      23,661          96,551      74,478  
Acquisition and
divestiture related:
Amortization of
acquisition related      (1,729  )     (1,683  )     (1,273  )         (4,681  )     (3,161  )
intangibles
Acquisition related
legal and consulting     (2,999  )     (3,630  )     (109    )         (11,465 )     (109    )
fees (1)
Other acquisition        -             (1,200  )     -                 (3,000  )     -
related costs (2)
Restructuring
related:
Severance and            4             (861    )     64                (931    )     24
retention costs
Facility closure         (4      )     (3      )     (9      )         (10     )     (24     )
costs (4)
Other:
Compensation expense
(benefit)—deferred       (13     )     (70     )     (88     )         (63     )     86
compensation plan
(7)
Stock-based              (948    )     (1,492  )     (1,603  )         (3,717  )     (4,458  )
compensation expense
Expenses related to
stockholder             -           (38     )    -               (2,614  )    -       
activities (6)
Non-GAAP SG&A           21,700      23,773      20,643          70,070      66,836  
expenses
                                                                                   
GAAP interest income     (344    )     (206    )     (10     )         1,450         (1,794  )
and other, net
Loss (gain) on
deferred                 (82     )     (477    )     (629    )         (245    )     685
compensation plan
securities (7)
Life insurance
proceeds received       -           -           -               (2,313  )    -       
(7)
Non-GAAP interest
income and other,       (426    )    (683    )    (639    )        (1,108  )    (1,109  )
net
                                                                                   
GAAP provision
(benefit) for income     201           (33     )     576               (3,818  )     1,176
taxes continuing
operations
Tax effects of          588         3,076       347             9,341       1,413   
Non-GAAP adjustments
Non-GAAP provision
(benefit) for income    789         3,043       923             5,523       2,589   
taxes continuing
operations
                                                                                   
                                                                                   
                                                                                   
(1) Consists of costs incurred in connection with merger and acquisition-related activities,
including legal, accounting and other consulting fees and adjustments related to contingent
consideration.
(2) Consists of a accrued deferred closing date fee associated with the acquisition of NXP’s
high-speed data converter assets.
(3) Consists of an impairment charge related to tangible assets and a note receivable, net of
subsequent recoveries.
(4) Consists of ongoing costs associated with the exit of our leased and owned facilities.
(5) Consists of costs incurred in connection with the transition of our wafer fabrication
processes from our Oregon facility to TSMC.
(6) Consists of expenses incurred in response to activities and inquiries of Starboard Value
LP.
(7) Consists of gains and losses incurred on marketable equity securities related to our
deferred compensation arrangements and 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 and life insurance proceeds received to this trust.
(8) 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.


INTEGRATED DEVICE TECHNOLOGY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
                                                        
                                               Dec. 30,    April 1,
(In thousands)                                  2012       2012
                                                           
ASSETS
Current assets:
Cash and cash equivalents                      $ 112,802   $ 134,924
Short-term investments                           167,298     190,535
Accounts receivable, net                         62,423      60,609
Inventories                                      59,982      71,780
Prepaid and other current assets                30,449     23,684
Total current assets                             432,954     481,532
                                                           
Property, plant and equipment, net               75,725      69,984
Goodwill                                         145,129     96,092
Acquisition-related intangibles                  54,004      40,548
Other assets                                    28,199     29,478
TOTAL ASSETS                                   $ 736,011   $ 717,634
                                                           
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable                               $ 23,011    $ 25,211
Accrued compensation and related expenses        23,554      26,156
Deferred income on shipments to distributors     14,122      14,263
Deferred taxes liabilities                       465         421
Other accrued liabilities                       15,872     13,443
Total current liabilities                        77,024      79,494
                                                           
Deferred tax liabilities                         5,897       1,552
Long term income taxes payable                   458         706
Other long term obligations                     21,923     16,494
Total liabilities                                105,302     98,246
                                                           
Stockholders' equity                            630,709    619,388
                                                           
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY     $ 736,011   $ 717,634

Contact:

Financial Contact:
IDT Investor Relations
Mike Knapp, 408-284-6515
mike.knapp@idt.com
or
Press Contact:
IDT Worldwide Marketing
Graham Robertson, 408-284-2644
graham.robertson@idt.com