IDT Reports Fiscal Q4 2005 and Fiscal Year 2005 Results; Includes Reve

IDT Reports Fiscal Q4 2005 and Fiscal Year 2005 Results; Includes Revenue Growth of 13 Percent for the Fiscal Year; Fiscal Year Non-GAAP EPS of $0.33, GAAP EPS of $0.12 on Revenues of $391 Million

    Business Editors

    SANTA CLARA, Calif.--(BUSINESS WIRE)--May 3, 2005--IDT(TM) (Integrated Device Technology, Inc.) (Nasdaq:IDTI), a leading communications IC company, today announced its results for the fourth fiscal quarter and full fiscal year ended April 3, 2005. The results announced were in line with the Company's projections, and represented significant revenue and earnings per share growth on a year-to-year basis. The following outlines the Company's financial performance on a GAAP and Non-GAAP basis:

--	Revenues for the fourth fiscal quarter were $97 million, an increase of just over 1 percent compared to the third quarter of fiscal 2005 and an increase of 3 percent from the fourth quarter of fiscal 2004.
--	Revenues for fiscal year 2005 were $391 million, an increase of 13 percent compared to the previous fiscal year.
--	Non-GAAP net income for the fourth quarter of fiscal 2005 was $7 million, or $0.07 per diluted share, compared to net income of $6 million, or $0.06 per diluted share, in the third quarter of fiscal 2005 and net income of $9 million, or $0.08 per diluted share, for the same quarter one year ago.
--	Non-GAAP net income for the full fiscal year 2005 was $35 million, or $0.33 per share, compared to net income of $7 million, or $0.07 per share, during the previous fiscal year.
--	GAAP net income for the fourth quarter of fiscal 2005 was $6 million, or $0.06 per diluted share, compared to net income of $3 million, or $0.03 per diluted share, for the third quarter of fiscal 2005. GAAP net income for the fourth quarter of fiscal 2004 was $8 million, or $0.07 per diluted share.
--	GAAP net income for full fiscal year 2005 was $13 million, or $0.12 per share, compared to net income of $6 million, or $0.06 per share, during the previous fiscal year.
--	GAAP net income includes certain costs, charges and gains in accordance with GAAP. For example, the fourth quarter of fiscal 2005 GAAP results include a $6 million tax refund and a $2 million net tax benefit relating both to the partial settlement of an ongoing US tax audit and adjustments associated with the Company's decision to close its Manila facilities. For a complete reconciliation of GAAP to Non-GAAP results see the attached tables.

    "We are pleased with our fiscal year end results and are encouraged by a resumption of growth in the March quarter," said Greg Lang, president and CEO of IDT. "We view this improvement as a positive indicator that inventory correction issues are largely behind us."

    Continuation of Profitability Measures

    During the past 3 months, the Company has disclosed details of its financial restructuring efforts to further improve profitability. In January, the Company announced a reduction in force, consolidation of certain functions, and the consolidation of California operations into a new San Jose campus. In April, the Company announced the pending closure of its assembly and test facility in Manila, the Philippines, which when completed will result in a reduction in force of approximately 750 employees. The test and finish work currently performed at the Manila facility will be transferred to the Company's assembly and test facility in Penang, Malaysia at or around June 2005. Certain assembly functions will be transferred to third party sub-contractors, planned for the end of September 2005. These actions are a result of the Company's continued focus on improving profitability by fully utilizing its existing resources. In time, the combined effects of all these measures are projected to save approximately $5 to $6 million per quarter through the Company's P&L.
    "We are committed to continue strengthening our financial performance in fiscal 2006," added Lang. "We believe we can achieve stronger results through the combination of our restructuring efforts and the anticipated revenue growth resulting from our investments in leading-edge products."

    Webcast and Conference Call Information

    Investors can listen to a live or replay Webcast of the Company's quarterly financial conference call at www.IDT.com. The live Webcast begins at 1:30 p.m. PDT on Tuesday, May 3, 2005. The Webcast replay will be available after 5 p.m. PDT on May 3 through May 25, 2005. A taped telephone replay of the conference call will be available on May 3, 2005 beginning at 5 p.m. PDT by calling (800) 475-6701 or (320) 365-3844 and will be accessible until 11:59 p.m. PDT on May 8, 2005. The access code is 776488.

    Investor Information

    IDT stock is traded on the Nasdaq Stock Market(R) under the symbol "IDTI." The Company is included in the S&P 1000, which is a combination of the S&P MidCap 400 and S&P SmallCap 600 Indices, and is also part of the S&P SuperComposite 1500, which combines the S&P 500, MidCap 400, and SmallCap 600. Additional information about IDT is accessible at www.IDT.com.

    About IDT

    IDT is a global leader in preemptive semiconductor solutions that accelerate packet processing for advanced network services. IDT serves communications equipment vendors by applying its advanced hardware and software technologies to create flexible, highly integrated solutions that enhance the functionality and processing of network equipment. IDT accelerates intelligent packet processing with products such as switching solutions, network search engines (NSEs), programmable content inspection engines (CIEs), flow-control management (FCM) ICs and its family of Interprise(TM) integrated communications processors. The portfolio also comprises products optimized for communications applications, including telecom products, FIFOs, multi-ports, and timing solutions. In addition, the product mix includes high-performance digital logic and high-speed SRAMs to meet the requirements of leading communications companies.
    Currently headquartered in Santa Clara, Calif., the Company employs approximately 3,000 people worldwide and has a wafer manufacturing facility in Oregon, and test and assembly facilities in the Philippines and Malaysia. Additional information about IDT is accessible at www.IDT.com.

    Investors are cautioned that forward-looking statements in this release 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 supply 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. We urge 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 year ended March 28, 2004, and the Quarterly Report on Form 10-Q for the quarter ended January 2, 2005.

    IDT and the IDT logo are 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 Years Ended ---------------------------------------------------------------------- Apr. 3 Jan. 2 Mar. 28, Apr. 3 Mar. 28, 2005 2005 2004 2005 2004 -------- -------- -------- --------- ---------

Revenues $97,004 $95,658 $94,521 $390,640 $345,443

Cost of revenues 47,321 49,833 48,065 193,762 184,615

Restructuring charges, asset impairment and other 2,961 213 -- 1,380 -- -------- -------- -------- --------- ---------

Gross profit 46,722 45,612 46,456 195,498 160,828 -------- -------- -------- --------- ---------

Operating expenses:

Research and development 25,914 26,365 23,846 103,729 98,535

Selling, general and administrative 20,537 18,291 17,876 76,016 72,409

Acquired in-process research and development 65 29 -- 1,830 264 -------- -------- -------- --------- ---------

Total operating expenses 46,516 44,685 41,722 181,575 171,208 -------- -------- -------- --------- ---------

Operating income (loss) 206 927 4,734 13,923 (10,380)

Interest expense (16) (13) (65) (102) (344)

Gain (loss) on equity investments -- -- -- (12,831) 3,151

Interest income and other, net 3,377 3,657 3,545 12,363 13,698 -------- -------- -------- --------- ---------

Income before income taxes 3,567 4,571 8,214 13,353 6,125

Provision (benefit) for income taxes (2,612) 1,223 556 20 (271) -------- -------- -------- --------- ---------

Net income $6,179 $3,348 $7,658 $13,333 $6,396 ======== ======== ======== ========= =========

Net income per share:

Basic $0.06 $0.03 $0.07 $0.13 $0.06

Diluted $0.06 $0.03 $0.07 $0.12 $0.06

Weighted average shares:

Basic 105,325 105,806 105,432 105,825 104,607

Diluted 107,190 107,444 111,434 108,204 108,526

INTEGRATED DEVICE TECHNOLOGY, INC. NON-GAAP ADJUSTMENTS (Unaudited)

(In thousands)

Three Months Ended Years Ended ---------------------------------------------------------------------- Apr. 3 Jan. 2, Mar. 28, Apr. 3 Mar. 28, 2005 2005 2004 2005 2004 -------- -------- --------- --------- ---------

Net income $6,179 $3,348 $7,658 $13,333 $6,396 -------- -------- --------- --------- ---------

Non-GAAP adjustments:

Cost of goods sold:

Restructuring charges (1) 3,208 322 -- 3,555 15

Asset impairment (2) (610) (109) -- (2,513) --

Plant closure costs (2) 20 33 219 292 1,050

Amortization and impairment of acquisition-related intangibles (3) 2,131 1,626 573 6,084 1,767

Sales tax refund (5) (4,175) (4,175) --

Patent settlement -- -- 334 (18) 334

Operating expenses:

Acquired IPR&D (3) 65 29 -- 1,830 264

Plant closure costs (2) -- -- -- 36

Restructuring charges (1) 3,490 98 2 4,240 1,522

Amortization of acquisition-related intangibles (3) 429 421 518 1,752 1,971

Acquisition related costs (4) 463 507 -- 2,056 --

Sales tax refund (5) (1,442) -- -- (1,442) --

(Gain) loss on equity investments (6) -- -- -- 12,831 (3,151)

Other income (7) -- -- -- -- (794)

Taxes (7) (2,341) (21) -- (2,372) (2,038) -------- -------- --------- --------- ---------

Total Non-GAAP adjustments 1,238 2,906 1,646 22,120 976 -------- -------- --------- --------- ---------

Non-GAAP net income $7,417 $6,254 $9,304 $35,453 $7,372 ======== ======== ========= ========= =========

(1) Consists of costs for restructuring actions announced in fiscal years 2004-2005, primarily related to severance.

(2) Consists of costs associated with the closure of our Salinas plant and gains realized on the sale of related assets which were previously impaired.

(3) Consists of costs related to our acquisition of Zettacom in Q1 2005, TCAM3 acquisition from IBM in Q2 2004 and acquisitions of Newave and Solidum in Q1 2002 and Q3 2003, respectively. Newave-related costs include stock-based compensation and amortization of intangible assets. Zettacom, TCAM3 and Solidum-related costs include only amortization of intangible assets.

(4) Consists primarily of transitional costs incurred in connection with the acquisition of Zettacom, such as retention earned by former Zettacom employees, rent payments for the former Zettacom facility, and transitional services provided.

(5) Consists of a sales tax refund received in Q4 2005 related to the Manufacturers Investment Credit.

(6) Consists of an impairment charge in Q1 2005 related to our investment in NetLogic and a gain on the sale of our investment in PMC Sierra in Q2 2004.

(7) Q405 consists of the net reversal of tax reserves as a result of a settlement with the IRS and tax affects of the Manila plant closure announcement. Q1-Q2 2004 represent federal and state tax refunds received for tax years prior to 1996 plus interest.

INTEGRATED DEVICE TECHNOLOGY, INC. NON-GAAP STATEMENTS OF OPERATIONS (Unaudited)

(In thousands, except per share data)

Three Months Ended Years Ended ---------------------------------------------------------------------- Apr. 3 Jan. 2 Mar. 28, Apr. 3 Mar. 28, 2005 2005 2004 2005 2004 -------- -------- -------- --------- ---------

Revenues $97,004 $95,658 $94,521 $390,640 $345,443

Cost of revenues 49,708 48,174 46,939 191,917 181,449 -------- -------- -------- --------- ---------

Gross profit 47,296 47,484 47,582 198,723 163,994 -------- -------- -------- --------- ---------

Operating expenses:

Research and development 25,281 25,596 23,485 100,602 96,548

Selling, general and administrative 18,230 18,034 17,717 72,537 70,867 -------- -------- -------- --------- ---------

Total operating expenses 43,511 43,630 41,202 173,139 167,415 -------- -------- -------- --------- ---------

Operating income (loss) 3,785 3,854 6,380 25,584 (3,421)

Interest expense (16) (13) (65) (102) (344)

Interest income and other, net 3,376 3,657 3,545 12,362 12,904 -------- -------- -------- --------- ---------

Income before income taxes 7,145 7,498 9,860 37,844 9,139

Provision for income taxes (272) 1,244 556 2,391 1,767 -------- -------- -------- --------- ---------

Net income $ 7,417 $ 6,254 $ 9,304 $ 35,453 $ 7,372 ======== ======== ======== ========= =========

Net income per share:

Diluted $ 0.07 $ 0.06 $ 0.08 $ 0.33 $ 0.07

Weighted average shares:

Diluted 107,190 107,444 111,434 108,204 108,526

Non-GAAP results exclude acquisition-related charges and other expenses and benefits that management believes are not directly related to our ongoing operations. These non-GAAP results are consistent with another way management internally analyzes IDT's results and may be useful; however, 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.

INTEGRATED DEVICE TECHNOLOGY, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

Apr. 3 Mar. 28, (In thousands) 2005 2004 ----------------------------------------------------------------------

ASSETS

Current assets:

Cash and cash equivalents $188,761 $207,060 Short-term investments 392,472 401,154

Accounts receivable, net 52,948 53,091

Inventories 37,331 32,745

Prepaids and other current assets 11,292 12,101 --------- ----------

Total current assets 682,804 706,151

Property, plant and equipment, net 124,570 108,424

Goodwill and other intangibles 85,335 52,784

Other assets 9,431 38,194 --------- ----------

TOTAL ASSETS $902,140 $905,553 ========= ==========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable $ 18,726 $ 20,190

Accrued compensation and related expenses 15,293 11,560

Deferred income on shipments to distributors 19,478 21,411

Income taxes payable 25,722 33,267

Other accrued liabilities 20,206 19,250 --------- ----------

Total current liabilities 99,425 105,678

Long term liabilities 15,599 15,651 --------- ----------

Total liabilities 115,024 121,329

Stockholders' equity 787,116 784,224 --------- ----------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $902,140 $905,553 ========= ==========

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CONTACT: IDT Dawn Morse, 408-654-6515 (Investor Relations) dawn.morse@idt.com Phil Bourekas, 408-727-6116 (Worldwide Marketing) phil.bourekas@idt.com or Porter Novelli Brad Langley, 408-369-1500 brad.langley@porternovelli.com

KEYWORD: CALIFORNIA INDUSTRY KEYWORD: HARDWARE MANUFACTURING TELECOMMUNICATIONS NETWORKING EARNINGS CONFERENCE CALLS SOURCE: Integrated Device Technology, Inc.

Copyright Business Wire 2005