-- Revenues for the first fiscal quarter were $93.8 million, a decrease of 3 percent compared to the fourth quarter of fiscal 2005 and a decrease of just over 7 percent from the first quarter of fiscal 2005. -- Non-GAAP net income for the first quarter of fiscal 2006 was $5.5 million, or $0.05 per diluted share, compared to net income of $7.4 million, or $0.07 per diluted share, in the fourth quarter of fiscal 2005 and net income of $12.3 million, or $0.11 per diluted share, for the same quarter one year ago. -- GAAP net income for the first quarter of fiscal 2006 was $6.6 million, or $0.06 per diluted share, compared to net income of $6.2 million, or $0.06 per diluted share, for the fourth quarter of fiscal 2005. GAAP net loss for the first quarter of fiscal 2005 was $(5.0) million, or $(0.05) per diluted share. -- GAAP net income includes certain costs, charges and gains in accordance with GAAP, which management excludes from non-GAAP results, as it believes they are not directly related to on-going operations. -- During the quarter ended July 3, 2005, the Company excluded $4.2 million in costs associated with restructuring actions taken during the past two quarters, $1.7 million associated with an other-than-temporary impairment on its investment portfolio, and $2.2 million associated with amortization of intangibles, assets and other acquisition-related costs. -- The Company also excluded $8.9 million of net tax benefit primarily related to a reduction in income tax reserves in connection with a partial settlement with the IRS and a $0.6 million gain related to sales of assets from its closed Salinas facility, which were previously impaired. See the following tables for a complete reconciliation of GAAP to non-GAAP results.
"While revenues came in below our original forecast, we are pleased to have met our original earnings projection," said Greg Lang, president and CEO of IDT. "Our revenues experienced seasonal weakness across our distribution customers and commodity SRAM products. Our company wide restructuring activities, which are slightly ahead of schedule, made achieving our earnings projection possible. We view these profitability measures as an important step in continuing to strengthen our financial results. We expect the restructuring to be substantially complete in the next two quarters, resulting in an annualized savings of approximately $25 million."
Status of Profitability Measures
During the past six months, the Company has disclosed details of and began implementing its financial restructuring measures to further improve profitability. In January, the Company announced a reduction in force of approximately 240 North American employees, consolidation of certain functions, and a plan to consolidate six California facilities into a single San Jose campus. In April, the Company also announced the pending closure of its assembly and test facility in Manila, the Philippines, which will result in a reduction in force of approximately 750 employees when completed. During this recent quarter, the Company remained on-track with these overall efforts. The Company has begun the consolidation of its California facilities, which is expected to be complete by August 2005. As of June 2005, the test and finish work previously performed at the Manila facility was transferred to the Company's assembly and test facility in Penang, Malaysia, resulting in a reduction of more than 500 Manila employees, and the transition of assembly to sub-contract partners is substantially complete.
"We remain committed to continuing to strengthen our financial performance in fiscal 2006," added Lang. "We believe the combination of our restructuring efforts, our ongoing investments in new technology, and our announced agreement with ICS to merge, will position us well for top and bottom line growth."
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 July 27, 2005. The Webcast replay will be available after 5 p.m. PDT on July 27 through August 17, 2005. A taped telephone replay of the conference call will be available on July 27, 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 August 3, 2005. The access code is 789585. Investors can also listen to the live call at 1:30 p.m. PDT on July 27, 2005 by calling (800) 553-5260 or (612) 332-1025.
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.
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), 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 San Jose, Calif., the Company employs approximately 2,500 people worldwide and has a wafer manufacturing facility in Oregon and an assembly and test facility in 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. 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 year ended April 3, 2005.
Additional Information and Where to Find It
IDT has filed a registration statement on Form S-4, and IDT and ICS have filed a related joint proxy statement/prospectus, in connection with the merger transaction involving IDT and ICS. Investors and security holders are urged to read the registration statement on Form S-4 and the related joint proxy/prospectus because they contain important information about the merger transaction. Investors and security holders may obtain free copies of these documents and other documents filed with the SEC at the SEC's Web site at www.sec.gov . In addition, investors and security holders may obtain free copies of the documents filed with the SEC by IDT by contacting IDT Investor Relations at 408-284-6515. Investors and security holders may obtain free copies of the documents filed with the SEC by ICS by contacting ICS Investor Relations at 610-630-5300. IDT, ICS and their directors and executive officers may be deemed to be participants in the solicitation of proxies from the stockholders of IDT and ICS in connection with the merger transaction. Information regarding the special interests of these directors and executive officers in the merger transaction are included in the joint proxy statement/prospectus of IDT and ICS described above. Additional information regarding the directors and executive officers of IDT is also included in the IDT proxy statement for its 2004 Annual Meeting of Stockholders, which was filed with the SEC on July 23, 2004. Additional information regarding the directors and executive officers of ICS is also included in ICS's proxy statement for its 2004 Annual Meeting of Stockholders, which was filed with the SEC on September 28, 2004. These documents are available free of charge at the SEC's Web site at www.sec.gov and from Investor Relations at IDT and ICS as described above.