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Semtech Announces Third Quarter of Fiscal Year 2011 Results


CAMARILLO, Calif.--(BUSINESS WIRE)-- Semtech Corp. (Nasdaq: SMTC), a leading supplier of analog and mixed-signal semiconductors, reported un-audited financial results for its third quarter of fiscal year 2011 that ended October 31, 2010.

Net revenue for the third quarter of fiscal year 2011 was $123.1 million, up 63.8% percent from the third quarter of fiscal year 2010 and up 8.7% percent from the second quarter of fiscal year 2011.

Net income for the third quarter of fiscal year 2011, computed in accordance with U.S. generally accepted accounting principles (GAAP), was $23.6 million or 37 cents per diluted share. This compares to a GAAP net loss of $20.9 million or loss of 34 cents per diluted share in the third quarter of fiscal year 2010 and GAAP net income of $19.7 million or 31 cents per diluted share in the second quarter of fiscal year 2011.

GAAP gross profit margin for the third quarter of fiscal year 2011 was 60.0 percent compared to 55.1 percent in the third quarter of fiscal year 2010 and 59.6 percent in the second quarter of fiscal year 2011.

To facilitate the complete understanding of comparable financial performance between periods, Semtech also presents performance results net of certain non-cash and one-time items. Semtech's non-GAAP results exclude the following items:

Excluding the items listed above, non-GAAP net income for the third quarter of fiscal year 2011 was $30.9 million or 48 cents per diluted share. Non-GAAP net income was $16.2 million or 27 cents per diluted share in the third quarter of fiscal year 2010 and was $26.7 million or 42 cents per diluted share in the second quarter of fiscal year 2011.

Non-GAAP gross profit margin for the third quarter of fiscal year 2011 was 60.2 percent. Non-GAAP gross profit margin for the third quarter of fiscal year 2010 was 55.4 percent and 60.1 percent in the second quarter of fiscal year 2011.

Semtech had $228.7 million of cash, cash equivalents and marketable securities as of October 31, 2010, up from $193.2 million at the end of the second quarter of fiscal year 2011.

Mohan Maheswaran, Semtech's President and Chief Executive Officer, stated, "Semtech delivered another quarter of record-setting revenue, gross margin, operating profit and earnings per share. Continued demand for our solutions resulted in sequential growth across all product lines. These results further validate our operating model and ability to identify and leverage secular trends driving growth in our end markets."

The results announced today are preliminary, as they are subject to customary quarterly review procedures by the Company's independent registered public accounting firm. As such, these results are subject to revision until the Company will have filed its quarterly report on Form 10-Q for the third quarter of fiscal year 2011.

Fourth Quarter of Fiscal Year 2011 Outlook

Non-GAAP Financial Measures

To supplement the Company's consolidated financial statements prepared in accordance with GAAP, this release includes a non-GAAP presentation of gross profit, net income and earnings per diluted share. To provide additional insight into the Company's fourth quarter outlook, this release includes a presentation of forward-looking non-GAAP earnings per diluted share. All of these non-GAAP measures exclude stock-based compensation, amortization of acquired intangible assets, and the other items detailed above. These non-GAAP measures are provided to enhance the user's overall understanding of the Company's comparable financial performance between periods. In addition, the Company's management generally excludes such items in managing and evaluating the performance of the business. A further discussion of these non-GAAP financial measures can be found above. Reconciliations of GAAP results for the third quarter of fiscal years 2011 and 2010 and the second quarter of fiscal year 2011, as well as a reconciliation of forward-looking earnings per diluted share for the fourth quarter of fiscal year 2011, appear with the financial statements included with this release. These additional financial measures should not be considered substitutes for any measures derived in accordance with GAAP and may be inconsistent with similar measures presented by other companies.

Forward-Looking and Cautionary Statements

This report contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are statements other than historical information or statements of current condition and relate to matters such as future financial performance, future operational performance, the anticipated impact of specific items on future earnings, and our plans, objectives and expectations. These forward-looking statements are identified by the use of such terms and phrases as "intends," "goal," "estimate, "expect," "project," "plans," "anticipates," "should," "will," "designed to," "believe," and other similar expressions which generally identify forward-looking statements. Forward-looking statements involve known and unknown risks and uncertainties that could cause actual results and events to differ materially from those projected. Important factors that could cause actual results to differ materially include, but are not limited to: the continuation and/or pace of key trends considered to be main contributors to the Company's growth, such as demand for increased network bandwidth, demand for increasing energy efficiency in the Company's products or end use applications of the products, demand for increasing miniaturization of electronic components; shifts in demand among target customers, and other comparable changes in projected or anticipated markets; adequate supply of our products from our third-party manufacturers; benefits derived from recent acquisitions; the depth, extent and duration of current and potential national and worldwide economic uncertainty, including such uncertainty associated with and arising predominantly from European markets, at both a macro level, and as it impacts the Company's products, industry, and market sectors; the Company's ability to forecast and achieve anticipated revenues and earnings estimates in light of continuing economic uncertainty; the Company's ability to manage expenses to achieve anticipated amounts; the amount of legal expenses connected with the current defense of class action litigation relating to prior stock option award practices, as such expenses may be impacted by the nature and timing of procedural or other developments in the course of the litigation; and the amount and timing of expenditures for capital equipment deemed necessary or advisable by the Company. Additionally, forward-looking statements should be considered in conjunction with the cautionary statements contained in the "Risk Factors" section and elsewhere in the Company's Annual Report on Form 10-K for the fiscal year ended January 31, 2010, in the Company's other filings with the SEC, and in material incorporated therein by reference. In light of the significant uncertainties inherent in the forward-looking information included herein, any such forward-looking information should not be regarded as representations by the Company that its objectives or plans will be achieved or that any of its operating expectations or financial forecasts will be realized. Investors are cautioned not to place undue reliance on any forward-looking information contained herein. The Company assumes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

About Semtech

Semtech Corporation is a leading supplier of analog and mixed-signal semiconductors for high-end consumer, computing, communications and industrial equipment. Products are designed to benefit the engineering community as well as the global community. The company is dedicated to reducing the impact it, and its products, have on the environment. Internal green programs seek to reduce waste through material and manufacturing control, use of green technology and designing for resource reduction. Publicly traded since 1967, Semtech is listed on the NASDAQ Global Select Market under the symbol SMTC. For more information, visit http://www.semtech.com.

Semtech and the Semtech logo are marks of Semtech Corporation.

 
SEMTECH CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Table in thousands - except per share amount)
 
  Three Months Ended   Nine Months Ended
Oct 31,   Aug 1,   Oct 25, Oct 31,   Oct 25,
2010 2010 2009 2010 2009
Q3 2011   Q2 2011   Q3 2010 Q3 2011   Q3 2010
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
 
Net sales $ 123,125 $ 113,227 $ 75,147 $ 338,232 $ 201,541
Cost of sales   49,304   45,795   33,776     139,932   91,286  
Gross profit 73,821 67,432 41,371 198,300 110,255
Operating costs and expenses:
Selling, general and administrative 25,501 24,915 18,521 76,767 52,717
Product development and engineering 18,400 17,404 10,467 51,107 31,142
Amortization of acquired intangible assets   2,406   2,405   303     7,216   908  
Total operating costs and expenses   46,307   44,724   29,291     135,090   84,767  
Operating income 27,514 22,708 12,080 63,210 25,488
Interest and other income, net   3   308   1,136     508   2,708  
Income before taxes 27,517 23,016 13,216 63,718 28,196
Provision for taxes   3,916   3,354   34,103     9,653   36,719  
Net income $ 23,601 $ 19,662 $ (20,887 ) $ 54,065 $ (8,523 )
 
Earnings per share:
Basic $ 0.38 $ 0.32 $ (0.34 ) $ 0.87 $ (0.14 )
Diluted $ 0.37 $ 0.31 $ (0.34 ) $ 0.85 $ (0.14 )
 
Weighted average number of shares:
Basic 62,493 61,933 61,030 61,950 60,622
Diluted 64,555 63,552 61,030 63,723 60,622
 

 
SEMTECH CORPORATION
CONSOLIDATED BALANCE SHEETS
(Table in thousands)
 
  Oct 31,   Jan 31,
2010 2010
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 142,209 $ 80,598
Temporary investments 42,686 55,462
Receivables, less allowances 58,911 31,163
Inventories 43,203 33,819
Deferred income taxes 11,808 11,808
Other current assets   11,925   6,616
Total current assets 310,742 219,466
 
Property, plant and equipment, net 50,568 38,063
Long-term investments 43,810 26,163
Deferred income taxes 2,392 7,153
Goodwill 129,651 129,651
Other intangible assets, net 77,127 84,343
Other assets   14,865   9,455
Total assets $ 629,155 $ 514,294
 
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 36,273 $ 23,643
Accrued liabilities 38,946 34,008
Income taxes payable 6,536 8,512
Deferred revenue 5,210 3,276
Accrued taxes 2,609 2,609
Deferred income taxes   1,332   1,332
Total current liabilities 90,906 73,380
 
Deferred income taxes - non-current 16,505 16,505
Accrued taxes 9,597 9,497
Other long-term liabilities 14,030 9,171
 
Shareholders' equity   498,117   405,741
Total liabilities & shareholders' equity $ 629,155 $ 514,294
 

 
SEMTECH CORPORATION
SUPPLEMENTAL INFORMATION - NOTES TO CONSOLIDATED GAAP STATEMENTS OF INCOME
(Tables in thousands - except per share amounts)
 
  Three Months Ended   Nine Months Ended
Oct 31,   Aug 1,   Oct 25, Oct 31,   Oct 25,
2010 2010 2009 2010 2009
Stock-based Compensation Expense Q3 2011 Q2 2011 Q3 2010 Q3 2011 Q3 2010
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Cost of sales $ 305 $ 646 $ 284 $ 1,477 $ 942
Selling, general and administrative 5,206 4,702 2,658 15,512 9,602
Product development and engineering   1,908     1,858     1,160     5,936     3,276  
Total stock-based compensation expense $ 7,419   $ 7,206   $ 4,102   $ 22,925   $ 13,820  
 
 
Three Months Ended Nine Months Ended
Oct 31, Aug 1, Oct 25, Oct 31, Oct 25,
2010 2010 2009 2010 2009
Gross Profit - Reconciliation GAAP to Non-GAAP Q3 2011 Q2 2011 Q3 2010 Q3 2011 Q3 2010
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
 
GAAP gross profit $ 73,821 $ 67,432 $ 41,371 $ 198,300 $ 110,255
Adjustments to GAAP gross profit:
Stock-based compensation expense 305 646 284 1,477 942
Fair value adjustment related to acquired inventory   -     -     -     2,311     -  
Non-GAAP gross profit $ 74,126   $ 68,078   $ 41,655   $ 202,088   $ 111,197  
 
 
Three Months Ended Nine Months Ended
Oct 31, Aug 1, Oct 25, Oct 31, Oct 25,
2010 2010 2009 2010 2009
Net Income - Reconciliation GAAP to Non-GAAP Q3 2011 Q2 2011 Q3 2010 Q3 2011 Q3 2010
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
 
GAAP net income $ 23,601 $ 19,662 $ (20,887 ) $ 54,065 $ (8,523 )
 
Adjustments to GAAP net income:
Stock-based compensation expense 7,419 7,206 4,102 22,925 13,820
Legal expenses related to stock option matters 613 1,065 1,078 3,301 1,147
Fair value adjustment related to acquired inventory - - - 2,311 -
Amortization of acquired intangible assets 2,406 2,405 303 7,216 909
Restructuring costs   -     -     50     -     398  
Total before taxes 10,438 10,676 5,533 35,753 16,274
Associated tax effect   (3,131 )   (3,613 )   31,597     (10,138 )   28,757  
Total of supplemental information net of taxes   7,307     7,063     37,130     25,615     45,031  
Non-GAAP net income $ 30,908   $ 26,725   $ 16,243   $ 79,680   $ 36,508  
 
Diluted GAAP earnings per share $ 0.37 $ 0.31 $ (0.34 ) $ 0.85 $ (0.14 )
Adjustments per above   0.11     0.11     0.61     0.40     0.74  
Diluted non-GAAP earnings per share $ 0.48   $ 0.42   $ 0.27   $ 1.25   $ 0.60  
 
 
Three Months Ended Nine Months Ended
Oct 31, Aug 1, Oct 25, Oct 31, Oct 25,
2010 2010 2009 2010 2009
Tax Impact Associated With Supplemental Information Q3 2011 Q2 2011 Q3 2010 Q3 2011 Q3 2010
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Adjustments to GAAP net income:
Stock-based compensation expense $ 2,881 $ 2,703 $ 705 $ 6,619 $ 3,287
Transaction and other expenses - - $ (32,801 ) - $ (32,801 )
Legal expenses related to stock option matters 250 263 406 1,129 437
Fair value adjustment related to acquired inventory - - - 878 -
Amortization of acquired intangible assets - 647 85 1,512 254
Restructuring costs   -     -     8     -     66  
Total of associated tax effect $ 3,131   $ 3,613   $ (31,597 ) $ 10,138   $ (28,757 )
 
Q4 FY11 Earnings Per Share Guidance
GAAP to Non-GAAP Reconciliation (net of tax)
Low High
GAAP earnings per share $ 0.28 $ 0.32
 
Stock-based compensation expense 0.07 0.07
Legal expenses related to stock option matters 0.01 0.01
Amortization of acquired intangible assets 0.03 0.03
   
Non-GAAP earnings per share $ 0.39   $ 0.43  
 

Semtech Corporation
Linda Brewton, 805-480-2004
webir@semtech.com

Source: Semtech Corp.

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