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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